1951-05-01

[Stage Direction]
A message from His Excellency the Governor General transmitting supplementary estimates for the financial year ending March 31, 1952, was presented by Hon. Douglas Abbott (Minister of Finance) and read by Mr. Speaker to the house.
Hon. Douglas Abbott (Minister of Finance):: Mr. Speaker, this special supplementary estimate is for an item of $2 million to provide assistance to unemployable veterans who are in receipt of disability pensions under the Pension Act. Ordinarily I would make the formal motion that it be referred to the committee of supply, but since this estimate, together with other matters respecting veterans, is to be considered by the veterans affairs committee, I move instead:
That the message of His Excellency, together with the estimates presented this day. be referred to the special committee on veterans affairs, saving always the powers of the committee of supply in relation to the voting of public moneys.


[Stage Direction]
Motion agreed to.

Mr. Daniel Mclvor (Fort William):: Mr. Speaker, on a question of privilege, I want to thank hon. members of the house, members of the press gallery and a number of the elevator operators for the cheerful and generous response to the suggestion that the page boys be given a holiday. I apologize for not having got in touch with everybody yet, but the door is still open.
I will turn over to the Sergeant-at-Arms the list of donors, with what they have given. Your donations of a dollar or more must not prejudice the bonus for the page boys at the end of the session. The mayor of Montreal has telephoned an invitation, and he will show the boys the big things in his city. I suggest that next year the bachelors of the House of Commons should provide a trip for the stenographers.



RAILWAYS AND SHIPPING

[Stage Direction]
Fourth report of special committee on railways and shipping owned, operated and controlled by the government.-Mr. Cleaver.


Right Hon. L. S. St. Laurent (Prime Minister):: Referring again to the question raised last week by the hon. member for Trinity-Conception (Mr. Stick), I now have a statement relating to the United States leased bases in Newfoundland, about which the permanent joint board on defence has made certain recommendations. I apologize in advance for the length of the statement, but I think it is a matter of general interest to all members of the house.
In March, 1941, as hon. members will recall, the United Kingdom leased to the United States for ninety-nine years land for naval and air bases in several colonies and territories including Newfoundland. This leased bases agreement empowered the United States to establish and operate naval and air bases, and also provided extensive rights and privileges for the United States forces to be stationed at these bases. These rights related to such things as the jurisdiction of courts, customs and excise taxes, income tax, and military postal facilities. Pursuant to this agreement the United States established and still maintains four bases in Newfoundland. These are: Pepperell air force base near St. John's; Harmon air force base near Stephen-ville; McAndrew air force base at Argentia; the naval operating base at Argentia.
On February 10, 1949, in the course of the debate on union with Newfoundland, I made a reference to these leased bases. It might be useful if I repeated what I said then. It is as follows:
If and when Newfoundland becomes a part of Canada, those leases will still be valid leases affecting the lands described in them. They contain provisions which go beyond the provisions to which the Canadian government has agreed with respect to anything done by the United States government in the territory of Canada, and we hope that it will be possible to get the government of the United States to agree that it will not exercise those rights in a manner that would offend against our rights of sovereignty in Newfoundland. But that is something that will have to be brought about by negotiation and agreement with the government of the United States. The situation is the same as if the hon. member, having a farm. leased a building lot on it for ninety-nine years and then sold his farm. The acquirer would have to take the farm and respect the agreement the hon. member had made with regard to the building lot. But he could go to the man who had the lease on the building lot and try to make a new deal with him. That is

Leased Bases in Newfoundland what we intend to try to do with the government of the United States. But if they are not disposed to make any change in the arrangement, we shall be obliged to respect the rights that exist there, just as we shall be obliged to respect as a fact the existing situation in the territory of Newfoundland.
Before the union with Newfoundland we informed the United States government that the Canadian government hoped the United States would consider relinquishing some of the extraterritorial rights conferred by the 1941 agreement on United States forces in Newfoundland. The Canadian request said, in part:
In the opinion of the Canadian government the prospective change in the status of Newfoundland justifies a modification of the 1941 bases agreement in respect of the Newfoundland bases in order to bring that agreement into accord with the principles which, for many years, have governed the defence relations between Canada and the United States.
Thus the joint statement issued by the Prime Minister of Canada and the President of the United States on February 12, 1947, refers to the "underlying principle" that " all co-operative arrangements will be without impairment of the control of either country over all activities in its territory," and the recommendation of November 20, 1946, of the permanent joint board on defence, which has been accepted by both governments, states that defence co-operation projects in either country should be agreed to by both governments, should confer no permanent rights or status upon either country, and should be without prejudice to the sovereignty of either country.
In seeking the modification of provisions of the lease, the Canadian government recognized, as I have indicated, that we were asking the United States to give up legal rights of undoubted validity. As is customary in our discussions with the United States, the request was considered by the United States authorities on a higher plane than the plane of strict legality.
Our two governments decided to ask the permanent joint board on defence to examine and report on the Canadian request. The board undertook an exhaustive study of the complex questions involved, and the United States members, on behalf of their government, co-operated in a spirit of friendship in the search for a solution.
In March 1950 the board formulated a recommendation which has now been officially approved by both governments. This approval, which it is proposed to incorporate in an exchange of notes, will constitute a modification of the leased bases agreement. I am sure that all hon. members will share the appreciation felt by the government of the decision of the United States to give up voluntarily certain rights which were legally conferred for ninety-nine years by the 1941 agreement, before Newfoundland became a province of Canada.	.
TMr. St. Laurent.]
The recommendation of the joint board is in four parts which relate to income tax, customs and excise, postal privileges and the jurisdiction of the courts. I shall now table the recommendation and give a brief explanation of the effect of each part.
First: Income tax. On June 12, 1950, a new double taxation convention between Canada and the United States was signed. It has been approved by the parliament of Canada but is awaiting ratification in the United States. When it comes into force it will replace certain exemption provisions now in the bases agreement. In addition the board recommends that the United States waive the exemptions given by the bases agreement on contractors' 'profits, on United States civilian employees of such contractors and on the families of these employees. This part of the recommendation will place income tax exemptions of United States personnel in Newfoundland on the same basis as in the rest of Canada.
Second: Customs and excise. The United States will also waive duty and tax exemptions given by the bases agreement on:
(a)	contractor-owned equipment; (b) personal belongings and household effects of contractors and their United States employees other than on first arrival, and (c) individual purchases in Canada by United States personnel.
Customs and excise exemptions for post exchanges and service clubs will continue, it being understood that the United States authorities will endeavour to increase purchases for these institutions in Canada and will take special steps to prevent abuse of privileges continued under the agreement.
Third: Postal privileges. Originally Canada asked for replacement of United States military postal facilities by Canadian post offices. Although the United States authorities were not prepared to accede fully to this request, under the board's recommendation the United States will not establish normal civilian postal offices and will limit the use of their army post office system strictly to mail destined to United States territory or to other United States army post offices.
Fourth: Jurisdiction of the courts. This part of the recommendation covers four matters:
(i)	The United States waives all rights of jurisdiction, permitted under the bases agreement, over British subjects and over aliens other than United States citizens;
(ii)	The United States suspends for five years exercise of rights of jurisdiction over United States civilian personnel and all other rights conferred by article IV of the bases

agreement, subject to revival on notice thereafter or in event of war or other emergency;
(iii)	The Canadian government will seek to amend the Visiting Forces (United States of America) Act to permit of compulsory attendance of witnesses at United States courts-martial;
(iv)	The Canadian government will seek legislation to protect security interests of the United States forces in Canada, as required under the bases agreement.
The recommendation that the United States give up or suspend jurisdictional rights under article IV of the bases agreement is conditional upon the Canadian government, with the concurrence of the Newfoundland government, giving to the United States government assurances that the new arrangements will in practice give United States officials in Newfoundland a degree of jurisdiction comparable to that which they have in fact exercised up to now. The attorney general of Newfoundland has been consulted and he advises that there will be no difficulty about giving these assurances because, in fact, the United States officials have exercised in a reasonable manner their jurisdictional rights under the bases agreement. They have not, for example, attempted to exercise the jurisdiction over Canadian citizens which the bases agreement gave them.
What the condition and the assurances mean is that, in practice, members of the United States forces in Newfoundland will generally be dealt with by United States service courts, which is a reasonable and sensible arrangement in the circumstances. Corresponding treatment is in fact given to Canadian forces which may be stationed from time to time in the United States.
The board's recommendation will provide the occasion for the extension of the Visiting Forces (United States of America) Act as revised to Newfoundland and remove what is perhaps the most objectionable feature of the bases agreement, namely, the right of jurisdiction by United States courts over Canadian citizens.
Referring to the recommendation as a whole, it meets most of the specific requests which the Canadian government originally put forward. Obviously a negotiation of this kind required a willingness on both sides to give and take. In the view of the Canadian government, the recommendation removes the features, most objectionable to us, of the taxation and jurisdictional rights conferred by the leased bases agreement.
Leased Bases in Newfoundland
The government will in due course be making to the house five legislative proposals flowing in whole or part from the recommendation.
In connection with the customs tariff it has already been proposed, in the budget speech, that item No. 708 of the customs tariff should be revised. At present it deals with customs privileges for the United Kingdom government only.
In connection with military post offices, an enabling clause will be included in the proposed bill to amend the Post Office Act.
In connection with the recommendation for security legislation, there will be two measures. First, a bill along the lines of the Official Secrets Act is proposed for the protection of allied governments. Second, a new section in the Criminal Code for the protection of property of allied forces is also under consideration.
It is proposed to add to the Visiting Forces (United States of America) Act a new section under which the governor in council would have authority to provide by regulation for compulsory attendance of witnesses before United States courts-martial, in the same manner as now applies to courts-martial of the Canadian forces. This amendment will, for convenience, be included in a Canadian forces bill which will deal with a number of other subjects related to defence.
Of the five proposed legislative measures, only one will refer expressly to United States forces, and that is the amendment to the Visiting Forces (United States of America) Act. When the time comes to examine the other four it will, I think, be agreed that, quite apart from the recommendation of the permanent joint board on defence, they are useful and possibly necessary measures to enable Canada to discharge obligations under the North Atlantic treaty.
The government believes that on consideration, hon. members will agree that the solution which has been recommended by the board is a reasonable compromise in an admittedly unprecedented situation.
Perhaps it may suit the convenience of the house if these recommendations I am tabling were printed as an appendix to Hansard today, so that hon. members will see the exact text.


Some hon. Members:: Agreed.
(For text of recommendations of permanent joint board on defence, see appendix, page 2601.)


Mr. George A. Drew (Leader of ihe Opposition):: Mr. Speaker, I am sure the

Leased Bases in Newfoundland members of the house will echo the hope expressed by the Prime Minister (Mr. St. Laurent), that on consideration they will find this is a reasonable arrangement in regard to the leased bases which were taken over under agreement by the United States prior to the time that Newfoundland came into confederation. As I was not previously aware of any of the arrangements that had been made, I shall of course require to give that consideration, as will other hon. members. There are, however, one or two observations I should like to make at this point, in view of the comprehensive statement the Prime Minister has made.
I notice that the arrangement with respect to jurisdiction, which the Prime Minister has stated to be the most important subject under consideration, provides that the United States give up or suspend certain jurisdictional rights, but that is conditional upon their being able to exercise in practice, even if not in strict verbal legality, the same authority that they exercised before. This seems to be giving with one hand and taking away with the other. I am interested in why it is necessary to go through such substantial formality if in practice the situation in that respect is to remain the same.
There is one thing about which I am sure all hon. members will be in hearty agreement, and that is that the Canadian government found it easy to deal with the government of the United States on a friendly basis and were not being shoved around. There has been some concern aroused in the minds of the members by things said outside of this house, if not in the house, as to whether we are still operating on a friendly and democratic basis with the government of the United States. This statement by the Prime Minister will reassure the members, and in the proper place, that it is now, as it has been in the past, easy to deal on a friendly and satisfactory basis with the government of the country which geographically is closest to us, and whose destiny in the years to come is inseparably linked with ours. The statement that this required a willingness on both sides to give and take merely indicates the firm foundation on which agreements of this kind are and should be established.
The Prime Minister has pointed out that one of the legislative provisions contemplated as a result of this arrangement is an amendment to the Criminal Code for the purpose of extending a greater measure of security to the forces of the United States. He has indicated that it will likely take the form of a provision which is to give a special measure of protection to the forces of any

allied country. In making that announcement he has emphasized the vitally important position that the new province of Newfoundland now occupies, not only in the defence of Canada but in the defence of the whole North American continent, and, as a result in the defence of freedom itself. No matter whether all the details of this agreement may be found entirely satisfactory after examination by those who live in Newfoundland and by other members of this house, certainly every one of us will hope that this agreement, in itself, may be regarded as a symbol of that firm and strong unity of purpose between these two countries, which is not only an advantage to ourselves but an advantage to the people of the whole world in these critical days.
I hope that the very necessity for introducing an amendment to the Criminal Code to increase the security of the allied forces will suggest to the Minister of Justice (Mr. Garson) the advisability of bringing in the long-required amendment to the Criminal Code which will make it possible to deal with any kind of threat to security by communist activities, whether in Newfoundland or any other place in Canada. This agreement in itself suggests the desirability of recognizing the constant threat presented to the defence of this country, and of every other country, by men who are serving a foreign state with the purpose of destroying our democracy by every device available. Most certainly they will seek, if it is within their power, to weaken this strong bastion of defence. Therefore, in view of the fact that there is to be an amendment to the Criminal Code for security of another kind, I once again strongly urge the consideration of that other type of security which would deal with this particular form of crime in a way that it cannot be dealt with' under any provision in the Criminal Code which is now on the statute book.
In view of the importance of this announcement, I hope that the Prime Minister will be prepared to answer questions which may be presented by hon. members from Newfoundland, amplifying the information that we have received this afternoon.


Mr. L. T. Stick (Trinity-Conception):: Mr. Speaker, as I raised this question first with the Prime Minister (Mr. St. Laurent), I should like to say to this house that we in Newfoundland have to live with these Americans down there, that we have found them to be fine people to live with, and that our relations with them have been on the most cordial basis. It is a matter of satisfaction to have such a statement as that which has been given by the Prime Minister, showing

that the negotiations were carried on in the most cordial and friendly manner. That is a matter of satisfaction to us in Newfoundland, and I should like to thank the Prime Minister for his full and explanatory statement.


Mr. G. F. Higgins (Si. John's East):: Mr. Speaker, I should like to echo the sentiments expressed by the hon. member for Trinity-Conception (Mr. Stick) and, if the Prime Minister (Mr. St. Laurent) does not mind, I have two questions that I should like to ask at this time in connection with his statement, for purposes of clarification.
The Prime Minister referred to the jurisdiction of the courts. In that connection, I wonder if there is any difference in the position from what it has been in the past few years. In other words, if action is taken against a United States soldier for negligence -we will say, for instance, in connection with driving a motorcar, even when he is on United States forces duty; if judgment is obtained against him, the only recourse open to the individual who suffers the damage is to claim against the soldier himself, and not against the United States government as such. That is one point I should like to ask about. Has there been any clarification in that connection?
The other point is this. What is to be the situation with respect to the use of Goose Bay and Gander airports? They are not within the leased areas, but United States forces are there in great numbers at Goose. Are they to be included in the agreement as well? What is to be the situation at Gander? Then I believe there is to be an amendment to the Income Tax Act. What will be the position of United States nationals at Gander, say, in the employ of the air lines? Will they come within the provisions of this income tax amendment or otherwise, or what is to be the position?
Then the other question is one that was up before: in the event of war, what is to be the position with respect to the commanding of the forces in Newfoundland? Will the commander be a Canadian general or a United States general? Is there any change in the right to the United States forces to acquire other properties in Newfoundland if they require them? As provided in the bases agreement, they can take what properties they want in the event of war. Will that provision still be in force? Has any discussion taken place with respect to the use by Canadian vessels of docking facilities at St. John's and Argentia9 I refer to the use of
80709-163J
1* 1951	2553
Commonwealth Division in Korea United States army docking facilities by Canadian vessels. Has any discussion taken place-


Some hon. Members:: Oh, oh.


Gordon Francis Higgins: This is the last question, Mr. Speaker.


Douglas Charles Abbott: Order.


Gordon Francis Higgins: I think I am in order, Mr. Speaker.


Some hon. Members:: No.


Gordon Francis Higgins: This is the last question. Has any discussion taken place about extending to Canadians now working at United States bases the privilege of eating in the American cafeterias?


Louis Stephen St-Laurent: The hon. member said that he had two questions, but as I listened I became confused as to where the dividing line might come between the first one and the second; I am sorry that I am not in a position to give him a positive answer at this moment.


Gordon Francis Higgins: Thank you.



NATIONAL DEFENCE


Hon. Brooke Claxton (Minister of National Defence):: Mr. Speaker, I should like to make a statement on the formation of a commonwealth division in Korea.
The 25th Canadian infantry brigade group, now on its way to Korea, will join other commonwealth forces to form a commonwealth division. This was decided after discussion among the commonwealth countries concerned and has been welcomed by the United Nations unified command as simplifying problems of administration and command in the theatre.
The Canadian brigade will make up one-third of the combatant troops. In addition, Canadian officers and men will form part of the staff of the divisional headquarters.
The division will consist of the following units:	The 28th and 29th United Kingdom
infantry brigades; the 25th Canadian infantry brigade group; the 3rd battalion Royal Australian regiment; the 16th New Zealand field artillery regiment, and the 60th Indian field ambulance unit.
The title of the division will be "The First (Commonwealth) Division, United Nations Forces", and the commander will be a United Kingdom officer, Major General A. J. H. Cassels, C.B., C.B.E., D.S.O., late of the Sea-forth Highlanders. The division will use

Veterans Benefit Act
the administrative and maintenance facilities now under the Australian commander in chief British commonwealth occupation forces in Japan, Lieutenant General Sir Horace Robertson. The senior Canadian *officer on the divisional staff will be the general staff officer, class I; and we have appointed Lieutenant Colonel E. D. Danby,
D.S.O., to occupy that post. By a happy coincidence, he is also a Seaforth Highlander -of Canada.
All Canadians, I am sure, will be pleased that our 25th brigade will be joined with formations with which the Princess Patricias have already distinguished themselves, all to form a unit in which forces of commonwealth countries will be fighting shoulder to shoulder to resist aggression in accordance with the aims of the United Nations.



VETERANS BENEFIT ACT


Hon. Hugues Lapointe (Minister of Veterans Affairs):: Mr. Speaker, if I can obtain the unanimous consent of the house, I should like to make a motion to broaden the terms of the resolution which appears as. No. 5 on today's order paper, under government orders, and which reads:
Resolved, that it Is expedient to introduce a measure to make certain rights, privileges and benefits applicable to persons serving in that part of the armed forces of Canada designated as the special force.
The purpose of the proposed change would be to add the words "and to certain other members of the Canadian forces." The purpose of the amendment is to extend the benefits of the Reinstatement in Civil Employment Act and of the Unemployment Insurance Act to persons enrolled for service and officers and men of the reserve force who in either case, since July 5, 1950-which was the date of the creation of the special force, I believe-became members of the Canadian forces for a single term not exceeding three years. I understand that my parliamentary assistant has had the opportunity of discussing this matter with some hon. members on the opposite side of the house. If I can get the unanimous consent of the house, I will make this motion now.


Mr. Speaker:: Has the hon. member the unanimous consent of the house?


Some hon. Members:: Agreed.
iMx. Lapointe: By leave, I move:
'That the proposed resolution respecting certain benefits, etc., applicable to that part of the armed

forces of Canada designated as the special force, as it appears in order No. 5 under government orders on today's order paper, be altered to read:
"Resolved that it is expedient to introduce a measure to make certain rights, privileges and benefits applicable to persons serving in that part of the armed forces of Canada designated as the special force and to certain other members of the Canadian forces."
He said:	His Excellency the Governor
General, having been made acquainted with the subject matter of this resolution as altered, recommends it to the consideration of the house.


[Stage Direction]
Motion agreed to.


Mr. W. G. Weir (Porlage-Neepawa) moved:: That the name of Mr. Jutras be substituted for that of Mr. Gauthier (Portneuf) on the special committee on veterans affairs.


[Stage Direction]
Motion agreed to.


[Stage Direction]
On the orders of the day:
Hon. Stuart S. Garson (Minister of Justice):: Yesterday, the hon. member for Lake Centre (Mr. Diefenbaker) asked me, without previous notice, the following question:
Under the new arrangement for an enlarged directorate, will one of the assistant commissioners be in charge of the branch on anti-espionage?
I took the hon. gentleman's question as notice, and would now reply to it as follows: The enlarged directorate referred to in the hon. member's question and in my statement of yesterday is the directorate of the administration and organization of the Royal Canadian Mounted Police, and its functions are as set out in my statement. This enlarged directorate will be in charge of assistant commissioner Josaphat Brunet. It, however, will have no direct responsibility with regard to anti-espionage, but will have an indirect bearing upon the work of this branch dealing with anti-espionage in the same degree as upon the work of other branches, since it will be dealing with the over-all administration of the whole force. The anti-espionage work of the Royal Canadian Mounted Police force is taken care of by the special branch which has to do with internal security in all its phases, including anti-espionage. This special branch since 1947 has been in charge of superintendent George B. McClellan, who is responsible directly to the commissioner.



AGRICULTURE


[Stage Direction]
On the orders of the day:
Mr.  W. Chester S. McLure@Queens: I wish to direct a question to the Minister of Agriculture. I gave him notice of this question, so he will understand it. Did the Department of Agriculture of Ottawa discourage the agricultural producers in the using of liquid fertilizers? If so, what was the Department of Agriculture's reason for so doing when the company manufacturing these liquid fertilizers had a permit so to do?


Right Hon. J. G. Gardiner (Minister of Agriculture):: Because of the fact that the
hon. member was kind enough to send me notice in advance, I have the answer here.
The Department of Agriculture has not discouraged the use of liquid fertilizer. However, there has been some controversy over some of the claims made by the manufacturer regarding its use, such as the treatment of seed grain before sowing. The experimental farms service conducted a large number of tests in 1950 and found that such treatment did not give significant results to the farmer, and this information was made available to the public.



REFERENCE TO STORAGE FIGURES GIVEN IN RETURN TABLED APRIL 12

[Stage Direction]
On the orders of the day:
James Garfield Gardiner: On Thursday last the hon.
member for Peterborough West (Mr. Fraser) asked a question with regard to a return, in the following words:
Mr. Speaker, I should like to ask a question of the Minister of Agriculture. A return, sessional paper 159-A, having to do with butter held in storage and sold bv the government, was tabled in my name on April 12, 1951. In this return it is stated that the total sales for January and February, 1951, amounted to 17,696,793 pounds, whereas total individual sales, according to the figures set out in the return, total 18,653,620 pounds. Will the minister find out why there is that discrepancy between the actual figures and the figures given?
In reply to the question regarding the apparent discrepancy between the amount of butter released from storage during the months of January and February, 1951, and the total individual sales as listed in the return tabled on April 12, I am informed that this is due to differences between the records of allocations of quantities to various dealers across Canada and the posting of the sales at Ottawa.
The figure of 17,696,793 pounds was the amount of butter delivered to those who
Inquiries of the Ministry applied for it, while the figure of 18,653,620 was the total amount of butter which had been allocated to those who had applied for it.



MANPOWER


[Stage Direction]
On the orders of the day:
Mr. G. R. Pearkes (Nanaimo):: May I direct a question to the Minister of Labour? Will the minister say when the next meeting of the manpower advisory committee will be held? How many meetings has that committee held to date?


Hon. Milton F. Gregg (Minister of Labour):: I understand from the joint chairmen of the national advisory council on manpower that arrangements are being made to hold the second meeting this month. The answer to the second question is that one meeting has already been held.


Mrs. Fairclough:: I should like to ask a
supplementary question. In view of labour conditions in the country today, and the great scarcity of adequate labour forces to fulfil the needs of industry, will the minister take under advisement the earlier calling of this committee, and possibly more continuous work?-because industry is suffering from a lack of adequate labour forces.


Milton Fowler Gregg: As I indicated in my reply to the hon. member for Nanaimo, the joint chairmen, to my knowledge, are making arrangements to call the next meeting together at an early day. I cannot say this afternoon the exact day, but it will be during the month of May.



HOUSING


[Stage Direction]
On the orders of the day:
Mr. Angus Maclnnis (Vancouver East):: should like to direct a question to the Minister of Resources and Development. Has the minister received a communication from the Vancouver housing association urging consideration of the Fraserview veterans housing project? I understood the government had decided not to go ahead with the 500 remaining houses. I regret I did not have time to give the minister notice of this question. If it is not convenient for him to answer it today, he can accept it as notice.


Hon. Robert H. Winters (Minister of Resources and Development):: Yes, I shall
be glad to accept it as notice.

Prairie Farm Assistance Act SUPPLY
The house resumed, from Monday, April 30, consideration of the motion of Mr. Fournier (Hull) for committee of supply.



PRAIRIE FARM ASSISTANCE ACT

Mr. Solon E. Low (Peace River):: When the house adjourned at eleven o'clock last night I was airing before the house a grievance arising out of the administration of the Prairie Farm Assistance Act. I had described certain lands in the Peace river country that were adversely affected by the amendment to the Prairie Farm Assistance Act which was passed in the spring session of 1950. I stated in my concluding words last night that when the minister put through the amendment last year I did not think he had in mind excluding from the act lands such as I have described to him. I said that in support of that view I would quote from the speech he made in the house on June 7, 1950. These are his words as they are reported at page 3310 of Hansard:
I want to make it perfectly plain that the bill does not deal with submarginal lands as such. It deals with lands which up to a certain date everybody considered were not good enough either to homestead or to buy. It is true that having set the date at December 31, 1940, there will be a few pieces of land in Saskatchewan particularly that were homesteaded after that date, and there will be a few parcels that were purchased after that date but they are largely in areas where the act would not apply in any case.
Those were the minister's words. I would ask hon. members to note that the minister said the amendment dealt with lands which up to 1940 were not considered by anybody good enough either to homestead or to buy. Those words would not apply, by any stretch of anybody's imagination, to lands in the Peace river country; because long before 1940 a good many applications had been received by the Alberta government for the outright purchase of or for homesteading rights on these parcels in question.
The minister knows, too, that these lands are situated in an area where, in nine years out of ten, there is ample moisture for the production of good crops. It seems to me that that is the very kind of land which the act originally was designed to protect. Even last year there was plenty of moisture; but in late July and early August two heavy hailstorms ripped through the area and riddled the splendid crops in an area fifty or sixty miles long and from one to perhaps fifteen or sixteen miles wide. Later in August, many parts of the country which had not been hit by the hail were visited by heavy frost. I believe it was on August 16, if my memory is correct, when there was

one of the earliest and most devastating frosts on record, followed by a snowstorm which flattened many of the crops to the point where they never recovered. The result was that hundreds of farms yielded below the minimum required to qualify under the Prairie Farm Assistance Act. There were many, of course, who suffered total failure.
The farmers affected are up against it in the matter of securing seed this spring, and they do not know where to turn for help. Everyone knows that the banks have tightened up on loans, which makes matters worse for these farmers. Another factor that aggravates the situation is that immediate neighbours of these lessee farmers who happened to own their own property, or to have leased the property prior to 1940, are being paid compensation for their losses which resulted from the same storms and frosts.
Again, the veteran farmers in the same block, many of whose farms border the area to which I am directing my remarks, are receiving payment for their losses, despite the fact they are leasing their lands from the Alberta government under contracts entered into since 1940. It appears therefore to those who are being denied the benefits of the Prairie Farm Assistance Act, simply because they are on ten-year lease contracts, that they are suffering discrimination; and it is difficult to convince them that they are not.
I believe they are. Every year they pay their one per cent premium when they market their grain, and I know after the tragedy of last fall many of them took some comfort in the thought that they would get enough funds for seed this spring under the provisions of the Prairie Farm Assistance Act.
I supported the minister's amendment in June, 1950, because I believed that P.F.A.A. benefits should not be paid on lands that were -not good enough to be homesteaded, or to be purchased outright, or to be called agricultural lands, and with the minister's assurance at that time that the amendment was to apply only to lands which up to 1940 were considered by everybody not to be good enough for homesteading or to be purchased for agricultural purposes. I had no misgivings about the amendment gt all. However, I now appeal to the minister to consider issuing instructions to the P.F.A.A. administration to reconsider the lands I have mentioned, and to give relief to these struggling farmers who fully expected they would be entitled to benefits under the act.
One more point before I conclude: What makes matters even worse for the farmers on the lands I have described is the fact that

their lease agreement requires them to stay on those lands and to seed them. That is a serious situation. For example, I have here one letter, out of scores I have received from the area, which I should like to quote in support of what I have said. This letter, from Deer Hill in the Peace river area, states:
I have to stay on the lease, which means that I can't go out to work. What am I to do for seed and fuel this spring? If I don't seed the place and stay on it, I lose it.
All of the work he has put on the property will have been lost. This man has been operating his lease for some years, and expects in due course to be able to pay the small cash payment and to get title to it. This he can do within the ten-year period from the time he took out the lease. If he has to leave this spring to go out to work so as to earn a grubstake, and cannot seed his place, one can readily see how serious the matter becomes. There are a good many others in the area who are similarly affected. Under the circumstances I am appealing to the minister to reconsider.


James Garfield Gardiner: May I ask a question, for purposes of information? The act provides that a man must be on the land in the fall of the year. He must be there until November 1. Then it provides that he must be back by May 1, in order to draw his pay. That permits him between November 1 and May 1 to go out and earn a grubstake. He is supposed to be back farming the land the next year in order to prove his intention of working on the land as a farmer. How is that affected in the instance to which the hon. member referred?


Solon Earl Low: I am glad the minister has raised the point. I was referring to provincial lease regulations, under the Prairie Farm Assistance Act. Under those provincial regulations the man to whom I referred is required to stay on the land and to seed it each spring; otherwise he loses his lease.


James Garfield Gardiner: Under the act he is required to be on the land and to seed it each spring in order to get his pay for the year before.


Solon Earl Low: Yes. There is this consideration, too: many of these people were not told finally until recently that they would not receive assistance under the act. This has made it more difficult for them. Most of them were told last fall by inspectors that their lands qualified under the act, and that therefore they could expect some assistance. They expected it, and now when spring is here they cannot get assistance and they do not know what to do about obtaining seed and fuel to be able to carry on their farming operations.
Prairie Farm Assistance Act I appeal to the minister on behalf of fully 100 or 150 persons in that area who are similarly affected. It becomes a rather serious matter, and I am sure the minister will give his sympathetic consideration to the appeal that has been made.


Mr. P. E. Wrighi (Melfort):: Mr. Speaker, I should like to say a word on this matter. Probably the largest part of the area affected in western Canada is in the territory represented by the hon. member for Peace River (Mr. Low) and myself. There was a great deal of sympathy for the minister's amendment last year. Its object was to prevent lands within the Palliser triangle especially, which during the years had come back under municipal and provincial ownership, from again being held under private ownership and becoming eligible for payments under the Prairie Farm Assistance Act. Unfortunately that is not the only land affected by the amendment. It did not affect us so much in the northeastern part of Saskatchewan, because generally speaking the men who have taken land there during the last three, four or five years have been returned men, and the amendment did not apply to them.
However, there are now many other people going on land in that area. Last year approximately 200,000 acres were allocated by the provincial government, and many of the men who went on that land were not returned men. Nevertheless they are paying and will pay their one per cent levy as long as the act remains in force, but will never be able to draw anything under the act. An injustice is being worked there, and as more land is opened up the injustice will become more apparent. I believe it is the intention of the government of Saskatchewan to try to withdraw from certain forest areas in that region approximately 200,000 acres a year for the next three or four years. Therefore on approximately a million acres of land this levy will be paid, and it is good land. It is land much the same as that referred to by the hon. member for Peace River. It is land with respect to which payments will have to be made under the Prairie Farm Assistance Act in all probability only for one year out of ten or one year out of twenty. Only when there is frost or some other extraordinary condition is this land likely to come under payment.
' It seems very unfair that the men who have settled on this land should have to pay the levy in perpetuity without ever having the opportunity of drawing any benefits under the act, while their neighbours who happen to have purchased similar land prior to 1941

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will receive benefits under the act. The minister would be well advised to introduce an amendment that would limit the provision which was placed in the act last year to the area contained within the Palliser triangle. I think it was his objective to prevent land within the Palliser triangle, where drought is recurring, from again coming under the act when it has once been withdrawn. Everybody sympathized with that objective, but it is working an injustice in other areas.



BRITISH NORTH AMERICA ACT


Mr. J. H. Blackmore (Lethbridge):: Mr. Speaker, I rise to voice a grievance against His Majesty's government of Canada. My grievance is that His Majesty's government of Canada has for at least nineteen years dishonoured and continues to dishonour the British North America Act, section 91, classes
14	and 15, greatly to the detriment of Canada. To help make my meaning clear may I read section 91 to the house. It is as follows:
It shall be lawful for the queen, by and with the advice and consent of the Senate and House of Commons, to make laws for the peace, order, and good government of Canada, in relation to all matters not coming within the classes of subjects by this act assigned exclusively to the legislatures of the provinces; and for greater certainty, but not so as to restrict the generality of the foregoing terms in this section, it is hereby declared that (notwithstanding anything in this act) the exclusive legislative authority of the parliament of Canada extends to all matters coming within the classes of subjects next hereinafter enumerated; that is to say . . .
I omit the first thirteen classes. Class 14 is "currency and coinage", and class 15 is "banking, incorporation of banks, and the issue of paper money".
When the United States proposed' to issue greenbacks there was some doubt as to the constitutionality, but in Canada the British North America Act left no doubt whatsoever of the clear constitutional authority of the federal treasury of Canada to issue currency as it saw fit.
In support of my position may I draw to your attention the fact that from at least as far back as 1910 up to and including 1932 the finance department of Canada occasionally employed the powers conferred upon the dominion government through classes 14 and
15	of section 91 of the British North America Act. For instance, the Finance Act of 1914 clearly indicated that the members of the Canadian parliament of those days realized, in a measure at least, the nature and value of the power to create debt-free currency conferred upon them through classes 14 and 15 of section 91. The Finance Act of 1914 also indicated that the parliament of that year
[Mr. Wright.l
appreciated in some small degree the vital potential importance to Canada of the powers inherent in classes 14 and 15 of section 91.
May I read the footnote appearing at the bottom of page 759 of the Canada Year Book for 1932, which pretty well outlines the general nature of the Finance Act of 1914. The footnote reads as follows:
The Finance Act, 1914 (5 Geo. V, c. 3), makes provision in case of war, panic, etc., for the issue of dominion notes against approved securities; this emergency arrangement was made a permanent feature by c. 48 of the statutes of 1923.
I should like to read into the record a passage from the report of the royal commission on banking and currency, published in 1933. I want to refer to paragraph 47 on page 22 to show how the Finance Act of 1914 was employed. My good Conservative friends will be deeply interested in this matter because this was all done under a good Conservative regime with one of the great statesmen of Canada, Mr. R. L. Borden, as prime minister. The paragraph reads as follows:
In the war session of August, 1914, parliament raised the partially covered issue to $50 million. Subsequently an issue of $16 million was made against a deposit of railway securities guaranteed by the dominion government, as well as an uncovered issue of $10 million for governmental purposes.
May I pause a minute or two to comment on "governmental purposes". I was talking the other day with a stalwart Liberal who maintained that the money which was issued between 1914 and 1917 never did go out into circulation, that it all remained hidden. Well, the poor man simply did not know. When he comes to read this, however, he will be able to learn something which will be of value to him. I continue with the quotation:
In 1917 an emergency issue of $50 million of dominion notes was made to finance war purchases in Canada, by the British government. The notes were secured by imperial treasury bills. In due course, this indebtedness was liquidated by payments from the British treasury and all of this issue had been redeemed by 1927.
That was ten years later.
No changes have since been made in the Dominion Notes Act except that by a statute passed on 30th March, 1933, the governor in council was empowered to suspend the redemption in gold of dominion notes, and an order in council to this effect was made on 10th April, 1933.
To Canadians in our situation I consider the incident recorded in the passage I have read into the records to have exceedingly great significance. If in 1914, with our country as immature as it was at that time, and entering into a war, the parliament of Canada thought it could issue $26 million of debt-free money and spend it into circulation, if it could issue $50 million against British treasury certificates that would not

be redeemed for at least ten years, thereby putting into circulation in all $76 million of debt-free money, I maintain that event is significant to us in this day of tremendous development in Canada, when we are at a loss to know where to find the money with which to do the things we feel we ought to do. This was done under the Finance Act of 1914.
Now I believe it would be well to read into the record three other paragraphs from this report of the royal commission on banking and currency in Canada, which was made in 1933. The first is paragraph 49:
A proclamation in pursuance of the act was issued on September 3. 1914, and thenceforth, throughout the war and the early post-war period, extensive use was made of the act.
I pause to comment on those words "extensive use was made of the act". We have no details as to how many millions of dollars of debt-free money were created and spent into circulation. We have to rely on the word "extensive" and what it probably meant in the minds of the careful men who drafted this report. Then paragraph 50:
An act passed in 1919 provided for the continuance in force of the proclamation made on September 3, 1914, "until two years after the conclusion of peace on termination of the present war." This explains the continued operation of the act until 1923.
This measure had been adopted as a war measure, but by 1919 it had' been found of sufficient value to justify the parliament of that day in continuing its operation for another two years, even in peacetime. Once more we have no account of the amount of money issued debt-free and spent into circulation in that way. Now paragraph 51:
The provision relating to a general moratorium has never been used. The powers relating to payments by the banks in their own notes, the issue of excess circulation and the suspension of the redemption in gold of dominion notes ceased to be exercised at various dates. But extensive use continued to be made of the power to issue dominion notes to the banks against approved securities with the result that it was decided in 1923 to make this part of the Finance Act mechanism a feature of the normal Canadian financial system.
I grant that those notes were issued on the securities of the banks, and consequently were lent into circulation. The question our generation has to ask and to which it must demand an answer is, was there any reason why those notes should not have been issued debt free to finance consumption, just as was done in the case of the $26 million and the $50 million backed by British treasury notes? When we get that answer I believe we shall all be much wiser and much readier to listen to those who advocate 80709-164
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the use of debt-free money under suitable circumstances. The paragraph continues:
In introducing the new legislation Mr. Fielding, the Minister of Finance, made the following brief explanation of its purpose:
"The act (Finance Act) was adopted as a war measure, and no doubt was exceedingly useful in the financial operations during the war. It may be said that the war being over we no longer have any need for the act, but experience has shown that the act is still required; indeed, I am inclined to think that something of the kind will have to become almost a permanent part of our financial system."
The Liberals should become interested here, because this is a great Liberal finance minister, Mr. Fielding, telling what he thought of the Finance Act of 1914 as he introduced the Finance Act of 1923.
Now I draw the attention of the house to a rather remarkable use made of the Finance Act in 1932 by the Right Hon. R. B. Bennett, while he was in power. This is an account that has been given me by a man who I think knew what he was talking about, because he was a member of the finance department. "In 1932 the dominion government issued $35 million worth of what they called notes. On November 1, 1932, the dominion government turned over these special notes to the chartered banks for two years. The chartered banks let the dominion government have $35 million at 4 per cent, to use as it saw fit. Then the chartered banks took the $35 million bond-like notes to the dominion finance department and pledged them for $35 million of dominion government bills, paying the dominion 3 per cent for the bills. The dominion finance department issued or printed the bills debt-free under the Finance Act of 1923. Thus the dominion government got $35 million for two years at 4 per cent, a very low interest rate for those days. Then the dominion received from the chartered banks 3 per cent on the $35 million it had created under the Finance Act and lent the banks in return for the pledge of $35 million of dominion bond-like notes. The result of the whole transaction was that the dominion obtained from the chartered banks the use of $35 million for two years at a net rate of 1 per cent."
I invite my respected Conservative friends to pay close attention to that operation under the Finance Act of 1923. If they could get $35 million at 1 per cent by that means in 1932, is there any conceivable reason why they could not have obtained $350 million just as easily if the goods and services position in Canada would have justified the issue? What a difference $350 million put into

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circulation in the right places in 1932 would have made to our country harassed by the depression!
Right at the time, Mr. Speaker, the Right Hon. R. B. Bennett was discovering this unique way in which to get money, was discovering and employing this Finance Act of 1923, the Bank of Canada came into being in 1934. Since I came into parliament I have not raised any serious question concerning this institution known as the Bank of Canada. The further I see this nation go under the Bank of Canada however, the more my mind is filled with question marks regarding the development of that institution. I have given some attention to trying to find an answer to the question how it happened the Bank of Canada was formed. Did Canadians demand that a Bank of Canada be formed? Did the Canadian parliament ask that a Bank of Canada toe formed?
I have wondered considerably about this matter ever since I saw a pamphlet which evidently was published by people with plenty of money at their disposal, and distributed generously throughout western Canada, if not all over Canada, called "A Bank of Canada; Why Not"?
I read this pamphlet with considerable interest, and I must say that the beautiful things that pamphlet would make the people who read it believe were coming as a result of the Bank of Canada have all faded away like mist on a July morning. In other words, someone who had a great interest in the formation of the institution spent a quantity of money endeavouring to popularize the institution with enough of the Canadian people so that there would not be any serious objection when the institution was set up. It is a question which I believe we would find extremely interesting, and which I am simply throwing out for the members to think about.
Was the Right Hon. R. B. Bennett in favour of the establishment of a Bank of Canada, or was this institution forced upon him against his will? I imagine hon. members would be quite interested to hear that I am told there is preserved in a safe place confidential correspondence between the Right Hon. R. B. Bennett and certain prominent Canadians, indicating quite clearly that he resisted the imposition of a Bank of Canada with every bit of energy at his disposal. All of that was behind the scenes, of course.
What is the net effect of the Bank of Canada? Hon. members will be able to see immediately that the Bank of Canada shut off from the federal treasury of Canada the

authority to issue debt-free money, because in the process of setting up the Bank of Canada the Finance Act of 1914 and the Finance Act of 1923 were repealed. When the Bank of Canada was accepted, the parliament of those days surrendered to an institution of questionable origin one of the most sacred powers conferred upon the dominion government by the British North America Act. If we now want money from the Bank of Canada, we have to borrow it. If we propose that we borrow money extensively from the Bank of Canada, we hear vague hints that we shall probably upset the stability of that bank. In fact I recall the Right Hon. Mackenzie King, while prime minister of this country, making a remark while we were discussing this sort of matter, to the effect that anyone must be completely foolish-these are not his words -to think that we could finance any proposition of the proposed nature through this little institution down on Wellington street.


George Alexander Drew: Mr. Speaker, I must confess I have been extremely interested in some of the more recent remarks of the hon. member now speaking, because I had not previously heard the suggestion that the Right Hon. R. B. Bennett, later Lord Bennett, was unduly subject to compulsion by other people in matters of that kind. I should like also to have an explanation as to what debt-free money is; that is something I do not understand.


John Horne Blackmore: I shall be happy to explain debt-free money if the hon. member is willing to listen for a minute or two. Let us just imagine that the leader of the opposition is in the Canadian mint, and he sees a fifty-cent piece minted. Does the Canadian mint owe anybody for that fifty-cent piece? Is there any conceivable reason why the Department of Finance which minted the fifty-cent piece should not take the fifty-cent piece and spend it as part of an old age pension to relieve suffering in Canada? Is there any reason under the sun why this fifty-cent piece has to go through the banking system and become a debt before it can be used?


George Alexander Drew: If the question is really directed to me, I must confess it does seem to suggest some interesting possibilities if those who work at the mint are free to handle the coins produced in that way, just as they see fit.


John Horne Blackmore: I am really sorry that the leader of the opposition made such a flippant remark. That is not what I said. I said the finance department that owns the mint could

do so. If the leader of the opposition cannot pay any better attention to what has been said in reply to his question than that-


George Alexander Drew: I am not going to enlarge on it. I have been able to follow to a very limited extent some of the suggestions about debt-free bonds or non-interest-bearing bonds. I must confess, however, I am wholly unable to understand debt-free money, and I should like to understand it.


John Horne Blackmore: Suppose we have a one-dollar bill. I really believe the proper place to discuss this is in committee, and if the leader of the opposition will bring the point up when we are discussing this matter, with the consent of the chairman, I shall answer him to the fullest degree. In the meanwhile, let us suppose a one-dollar bill is printed by the Bank of Canada. That one-dollar bill could or should be able to get out into circulation in either of two ways. There is no conceivable reason why the finance department should not take the one-dollar and spend it as part of its revenue. If it did that, the bill would come out into circulation debt-free. On the other hand, if the one-dollar bill goes through the banks, as it now does, it comes out into circulation in the form of a debt. Somebody has borrowed it. Somebody has to pay interest on it, and in due time it will have to be repaid to cancel the debt which was incurred in putting it into circulation. That dollar bill thus lent into circulation would be debt money. There is certainly a distinct difference between the kind of one-dollar bill we have in circulation when it is spent, and the same dollar coming out into circulation after being lent.
Now, we shall just leave that matter until we get into committee, when I shall be able to go into as much detail as the hon. member desires. Meanwhile, I give him one little illustration. Suppose he were travelling and he discovered a gold nugget worth $10. Some men have said that gold is the only money. This ten-dollar gold nugget is money in the sense that gold is money. Is there any debt connected with it? There is not the slightest debt connected with it. It is debt-free.


Solon Earl Low: If it goes through the banks, there will be.


John Horne Blackmore: That is right. If it is lent into circulation, it is a debt, even although it is gold. It is debt money then.


Mr. Cameron:: Let the hon. member try to borrow it from the leader of the official opposition.
80709-164J
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John Horne Blackmore: I believe I have given sufficient attention to the timely question asked by the leader of the opposition (Mr. Drew).


Mr. Benidickson:: I am sure that he understands fully. Let us now hear about R. B. Bennett.


John Horne Blackmore: I do not propose to go any further into this matter of the origin of the Bank of Canada at the present time. Personally, I have nothing against the Bank of Canada. I think that the personnel of the Bank of Canada, from Mr. Graham Towers right on down, are admirable and well-qualified people. However, I should just like to have someone take a little time off-and the Minister of Finance would please me best-to show us that we are actually better off in Canada as a result of the establishment of the Bank of Canada than we were before its establishment. Our banking system was just as strong and everything else that I can think of was just as well taken care of under the immediate control and direction, of the Department of Finance as ever it has been since the establishment of the Bank of Canada.


Solon Earl Low: And it was a great deal more amenable to control by the parliament of Canada.


John Horne Blackmore: The hon. member for Peace River (Mr. Low) makes a most pertinent remark. I do not propose to go any further into this aspect of the whole question; but I believe that what I have said, together with what I said yesterday, must convince any open-minded person that debt-free money, created by the state, backed by the going-concern, producing and consuming activities of the state, is money that is as sound as any that could possibly be conceived of, and that it is feasible for a state possessing the power which Canada was given by the constitution, to create debt-free money, in so far as there are sufficient exchanges or potential exchanges to support that debt-free money, and to spend it into circulation just as it would spend into circulation money collected by taxes or borrowed from the banks or from anybody else. If that is the case, this device of debt-free money offers us a way out of a financial situation in this world and in this nation today which, without debt-free money, looks utterly impossible.
I suggest that we consider debt-free money as one of the means of accomplishing by degrees our financial salvation in Canada, in the British commonwealth and perhaps in the world.
I want to refer to the matter of production before I leave the matter. Of course it is impossible to create debt-free money and to

Financial Policy
spend it into circulation with safety unless there is in the country sufficient production to absorb the money when it is spent into circulation. In other words, if there is a scarcity of goods and if money is created and put into circulation, then there will be inflationary pressure on prices, tending to make the price of goods rise. But if there is not a scarcity of goods but rather an abundance of goods, tending to make prices normally fall, as in the commencement of depression, then the debt-free money can do no harm whatsoever in the matter of inflation or inflationary pressure.
I should like to examine for a minute or two Canada's supply position. I hope to have an opportunity to question the Minister of Finance and anyone else who ought to know, with some degree of pertinacity in this matter of supply. There is no question that we have plenty of potatoes in Canada. There is not a doubt in the world that we can produce and have on hand plenty of a great many other things. Are we short of enough commodities to make it so that we could not issue debt-free money and spend it into circulation without any serious danger?
All I have to go by are considerations like this. As I recall it, in 1938 or 1937 our national production was worth about $3-8 billion. I am speaking entirely from memory now. Last year, I understand, our production was in the neighbourhood of $16 billion or $18 billion. Our population has not increased in anything like the proportion that production has increased. We will grant that prices have increased, but the actual physical production must be enormously greater than it was in 1938.


Solon Earl Low: At least three times.


John Horne Blackmore: The hon. member for
Peace River suggests that it has increased at least three times. If that is the case then, in a general sort of way, how can it be argued that we are in a short supply position?
That is one thing. Another thing is that whenever I ask about supply, all the people who ought to know shy clear of the question and seem to be quite hesitant about giving the actual figures concerning our supplies. The only one that I have heard talk with any degree of frankness, and with authority, is the Minister of Trade and Commerce (Mr. Howe). These are things which he said the other day and which I find greatly encourage me. Speaking on April 9, as reported at page 1762 of Hansard, he said:
I am sure-

Notice the word "sure".
-that we can get along quite comfortably as consumers and still engage in a substantial defence effort.
He uses the words "quite comfortably". May I say that no old age pensioner in this country is comfortable. None of the superannuated civil servants are comfortable. None of the war veterans in receipt of war veterans allowance are comfortable. Great numbers of our people in the lower income brackets are not comfortable. What does the minister's remark imply? Evidently it implies that we can greatly increase the consumption of a large section of our people without seriously affecting our economy. I can take no other interpretation from those words used by the minister. Knowing the Minister of Trade and Commerce from long experience in this house, I am inclined to believe-in fact, I am sure I can believe-that he has not been reckless in his choice of words.
The next question is what would constitute a substantial defence effort. I wonder if he means the $5 billion defence effort which we propose to make in Canada during the next three years? He must mean that. Does this mean then that the Minister of Trade and Commerce was telling us that we can spend $5 billion in defence effort in the next three years and still live comfortably? If so, there must be a fairly abundant supply of a great many of the essential things of life. If that is the case, we ought to be able to issue a considerable amount of debt-free money and spend it into circulation without taxing a corresponding amount of money out of circulation, and still be safe as to financial considerations.
Shortly after the minister made the statement to which I have referred, he made this statement:
Unless all-out war comes, Canadians can continue to live well.
What does that "all-out war" mean? I imagine that would be a condition comparable with what we were engaged in at the height of our activities in world war II, when we had something like three-quarters of a million of our finest producers away and a great many others engaged in war industry. We are faced with no such condition today. Then we were straining ourselves to the limit to send abroad goods of all kinds to help to supply the needs of our armed forces and those of our allies, including Britain. We are faced with no such condition as that now. The sum total of the conclusion that I must draw from these two passages is that our supply position, while not as good as we should like to see it in matters like beef, bacon, eggs and

dairy products, and in other products in which production is off because of government policy, must be good enough at least to justify the creation and the use of a good many million dollars of debt-free money, as they created them, issued them and used them in 1917.
I propose to go into this whole question still further at a later time, because I feel confident that there is no other way of meeting the exigencies of the time in which we live. The set of taxes which we shall be considering in the budget resolutions I feel does constitute a complete scandal, a complete reflection on our intelligence in legislation. If there is any way in the world of avoiding such things, let us seek it out.


Mr. E. G. Hansell (Macleod):: Mr. Speaker, I feel I should like to augment the hon. gentleman's speech with just a remark or two, which will not take me more than five or ten minutes, because I was particularly interested to hear the leader of the official opposition (Mr. Drew) in this house ask the hon. gentleman what he meant by debt-free money. The fact that he asked that question is very significant.
The leader of the opposition is an intelligent man. He has been out through the country from time to time bidding for power to run this country; and yet he has to stand up in this house and ask what debt-free money is. I wish the people could know that from coast to coast, because debt-free money, while it may be a term that is not too familiar to the average citizen, is a term that should be at least familiar to men in public life, and particularly men here who are more or less responsible for the country's business.
I also noticed the parliamentary assistant to the Minister of Finance (Mr. Sinclair), as he was sitting in his seat, giggled all over when the question was asked. I do not know why he should giggle so heartily. Perhaps that is his nature. He is a great man to giggle. When he giggles he jiggles all over. I can understand his giggling and jiggling at some joke or wisecrack that is made, but when the leader of the opposition asks the hon. member for Lethbridge (Mr. Blackmore), who used to lead this group in the house, a question of that kind, I cannot see much reason for his giggling and jiggling. If he keeps this up he is going to be known as- you know, there is a song that used to be sung about giggling Gertie. We will not be able to call the hon. gentleman giggling Gertie, but if he continues this we shall have to call him jiggling Jimmie.
Financial Policy


Mr. Sinclair:: The trouble was it was the blind leading the blind.


Ernest George Hansell: There is nothing of a lighter vein in the question, what is debt-free money, and the answer that my hon. friend gives. Books have been written about it; economists have explained it; it is not a new thing. And yet the leader of the opposition, the major party in this country that bids for power to run the country, has to ask what the term means.
One further matter: I should like to ask a question, and of course I do not expect it will be answered because we are not in committee. I should like to ask a question of the leader of the opposition and of the parliamentary assistant to the Minister of Finance. Do they believe that the chartered banks lend their depositors' money? The answer to that question^ will indicate how much they know about the operation of the present monetary policy in Canada.
The fact of the matter is that the chartered' banks create new money in the way of financial credit every time they make a loan, and this parliament by statute has given to the chartered banks the authority so to do, and, as my leader says, because they were afraid to take the responsibility of operating the systems themselves. Here is the next point. When the government need money they go to the chartered banks, or they could go to the people; but they go to the chartered banks, to whom they have given authority to issue money, and borrow new money from the chartered banks and pay an interest on it. There is no reason in the world why the government, when it desires to borrow money, cannot go to the Bank of Canada and let the Bank of Canada issue to the government the money they need without any interest at all. But that is not what happens in practice. As a very homely illustration, let me say this. Suppose I had an automobile. It is mine. I have authority to run it, or I have authority to give it to somebody else to run. Suppose I say to a friend of mine: "Here is my car; you can take it. Do what you like with it as long as you do not wreck it." My friend takes my car, and he runs a bit of a taxi service with it. When I want to go for a ride I telephone him and say: "I have to get out into the country. It is a distance of only about five miles." He says: "Well, that is all right, Mr. Hansell; I will come around and pick you up; I will take you out there and I will bring you back." He comes for me. He takes me out in my own car. He brings me back again, and on the way back he says: "I guess, Mr. Hansell, I will have to fill up with gas."-

Supply
He goes to the gas station. He fills it up, and he looks at me and he says: "You are going to pay for this gas?" So X pay the gas bill.


Mr. Knowles:: It's your car.


Ernest George Hansell: When I get home he does not say anything; but a day or two later I receive a bill for taxi service. What do you suppose would happen in a transaction like that? You would say, "Well, that is crazy." Yet it is no more crazy than this government's going to the chartered banks and borrowing new money at interest, when the Bank of Canada can put it in their books and issue it without any interest charge at all. That is how crazy the present financial policy of the Liberal government is, and I challenge anyone to dispute that logic. The logic and the facts are to be found in the proceedings of the banking and commerce committee in 1939.
X am not talking social credit now; I am talking actual banking practice as it is conducted today. Then, when an hon. member rises and asks a question such as was asked, and when the assistant to the Minister of Finance sits in his seat and giggles all over -why he should giggle, I do not know-I say to them it is not a giggling matter.
Motion agreed to and the house went into committee, Mr. Dion in the chair.



DEPARTMENT OF RESOURCES AND DEVELOPMENT

[Stage Direction]
383. Departmental administration, $381,223.
Item stands.

[Stage Direction]
309. General administration, $1,936,980.
Item stands.
The Chairman:: Department of Fisheries.


Solon Earl Low: Just a word; I wish to protest against the bringing in of any more departments today. I think that two more than have already been brought in will be quite sufficient to take care of any time the committee may have to deal with estimates, for some days. When we bring in more departments it simply denies to private members the right which is theirs, the constitutional right, to bring before the house and to air any grievances they may have. I say two departments are quite sufficient, and I am strongly opposed to bringing in any more at this time.


Mr. Harris (Grey-Bruce):: Mr. Chairman,
without particular reference to the proceedings of former sessions, it seems to me there are fewer departments in at this stage of this session than at any time in the eleven years I have been here. Under those conditions, and
IMr. Hansell.]
having in mind the fact that we have given notice on every occasion for four weeks that we would call four departments, and having in mind the further fact that I understand it is the desire of hon. members that the estimates for the Department of External Affairs may be called as well, with a view to having those estimates referred to the standing committee, notice was given last Friday that as soon as possible we would call the four departments mentioned, and external affairs.
If the hon. member would be prepared to withdraw his objection at this time, I am sure we shall be back in this position next Monday, at which time he could renew his objection, that the number of departments introduced is more than he feels would be proper and in the public interest.


Solon Earl Low: I am prepared to support the
calling of the estimates of the Department of External Affairs, so that they may be referred to the committee. I strongly object however to calling any more at this time. We are living in a most unusual time, and nothing that has been done in the past by way of precedent should be used as an argument today. I emphasize the fact that hon. members should be in a position to bring their grievances before the house at the earliest possible moment. They are denied that right if we bring in departments, in mass form, as we are doing this afternoon. My suggestion is that we introduce the Department of External Affairs, in addition to the two departments now introduced and referred to the committee. But let it stand at that.


Douglas Charles Abbott: I wonder if I might add just a word. As has been so often said, one of the principal functions of the House of Commons is to scrutinize carefully and examine the government's estimates and expenditures. The estimates were tabled about two months ago, or perhaps more than that. As yet we have barely started to examine the details of those estimated expenditures. There are some twenty odd departments, or their equivalent, which have to be opened. I suggest most strongly that, in discharging its proper responsibilities, the committee of supply should have available for discussion at this time at least nine or ten departments.
I have been charged, on occasions, with not bringing my estimates in early enough. There are only two days each week on which we can open departments.


Stanley Howard Knowles: Three.


Douglas Charles Abbott: I do not think it is at all unreasonable to ask, as was intimated last Friday, that we open four departments at

this time. I hope my hon. Mend, with his usual co-operation in matters of this kind, will appreciate the position of the Minister of Finance at this time in attempting to meet the wishes of the house. Each year we are charged with attempting to rush through the estimates at the end of the session. Let me say at once that there is no desire on the part of the government to do that; but if we are going to examine the estimates with any degree of attention, then I suggest we have to have departments available for discussion reasonably early in the session. I believe we should adhere to the understanding we had last Friday night and to which, as I recall, no serious objection was taken.


George Alexander Drew: Mr. Chairman, I am not going to object to the introduction of these departments at this time, because of the understanding I had that this was not to establish a precedent but rather was for the purpose of making it possible to have more departments available for consideration at such times as they might be brought forward by the minister in charge.
On the other hand I do not want any impression left that I would concur in the suggestion that any delay to consider the items in the estimates is due to any attempt on the part of members of the opposition to prevent their full consideration.


Douglas Charles Abbott: I did not suggest that.


George Alexander Drew: For one, I certainly am most anxious to get ahead and to have an opportunity to consider these estimates. For that reason I am prepared to support the introduction of the departments, but on the clear understanding that it is not to be regarded as a precedent for the rest of the session. Hon. members do regard these occasions as opportunities to introduce for discussion subjects which might not otherwise be discussed.


Douglas Charles Abbott: I think that is quite proper. The only reason it was suggested there should be four departments at this time is that the usual procedure is that two departments open each Monday, when motions of this kind are moved. In this instance, of course, the estimates of the Department of External Affairs might be considered as extra, to be referred to the special committee dealing with that subject. I was proceeding to say that the normal motion made on Mondays has been delayed week by week because of circumstances, for which I am blaming no one, namely the disposition of the amendment to go into supply and the introduction of the budget.
I am glad to note that the leader of the opposition will support the arrangement and,
Supply
as I say, I would hope that the leader of the Social Credit group might extend his co-operation too.


Solon Earl Low: I distinctly recall that on a number of former occasions we in this group have asked the Minister of Finance to bring forward his estimates at an early date in the session so that we could have ample opportunity to discuss the whole of the government's financial policy, because we felt that it was in the interests of the country so to do. We have never yet been able to get the finance estimates before the house in time-


Douglas Charles Abbott: I got them down earlier last year as requested, much earlier, as soon as I could get them in.


Solon Earl Low: It was earlier last year but, Mr. Chairman, we never did have a chance to go into a thorough discussion of the financial policy because it was too late in the session when they did come in. I am suggesting that we want to have a full discussion of the financial policy of this country, and the earlier the finance estimates can be brought before the house the better it will be. I should like to serve notice on the Minister of Finance now that we will expect him to be ready, when the first item of his estimates is called, to go right into a full discussion of the policy. We are not expressing any personal opposition to the minister. We like him, and we like to see him get up and defend his position.


Douglas Charles Abbott: He likes to do that.


Solon Earl Low: I am sure he likes to do that, but he has not had a chance to do it, and we think now is the most important time for a discussion of that kind.


Douglas Charles Abbott: If my hon. friend would like to add the Department of Finance to the five already suggested I will undertake to bring on my estimates fairly soon.


Solon Earl Low: If the Minister of Finance will substitute the Department of Finance for one of the five that he wants to bring in I will certainly support him.


Douglas Charles Abbott: My remark was somewhat facetious. As my hon. friend knows, one reason why it is not considered proper to bring on the estimates of the Department of Finance as early as those of some of the other departments is that on the budget debate we have a pretty fair opportunity to discuss financial policy. So far as the Minister of Finance is concerned, he is ready at any time to proceed with his estimates. I cannot be doing two or three things at once. I cannot be putting the budget resolutions through, the budget bills and my estimates
2S66

Supply
at the same time. I have to have a certain amount of time to see delegations in my office and that sort of thing, but subject to the will of the house I can bring them on at any time that they are desired.


Solon Earl Low: Will the minister just set aside his natural modesty for a few minutes now and say that he will call his own estimates at an early time?


Douglas Charles Abbott: Yes, I have said so. I shall be delighted to do that.


Solon Earl Low: Under the circumstances I would be quite prepared to concede the point, but there is one other thing which I think is very important. The only constitutional weapon in the hands of the opposition in this house, or in any other parliament in the empire for that matter, to enable them to give expression to the will of the people to get something done, is the right to hold up a single dollar of supply until such time as action has been taken by the government to remove the grievances. So far as I am concerned, I think it is high time that the opposition in this house began to make use of that constitutional right. We have pleaded with the government to do something about the high cost of living to relieve the people of the country from the suffering, uncertainty and fear under which they exist today. They have not seen fit to do so except, as the Minister of Finance has said, through some fiscal means he announced in the budget and prior to that. He knows that since those announcements the cost of living has gone up, and the burden is piling up.
I suggest to the opposition that we have within our hands as an opposition a weapon by which we can force the government to do something if we will make use of it, not to give them one single dollar of supply until they correct that situation. That is the feeling I have about this whole business, and I am serious about it. I am not just trying to play a game. I think members of this house know me well enough now after my being here for nearly six years to know that I am not accustomed to playing games. I am deeply serious about what I say. I say that as an opposition we should not grant the government one dollar of supply until they correct the high cost of living situation. It is within their power to do so. That is the reason why I am taking the stand I take today.


Douglas Charles Abbott: I am sure that no member on the government side quarrels with the statement that the opposition groups should have the fullest opportunity to lay before the house and the country any grievances which they feel they should put forward, but I feel
	.
sure my hon. friend, the leader of the Social Credit group, would be the first to admit that, having placed those views fully and clearly before the house and the country, the will of the majority must prevail in the final analysis. It is for that reason that I perhaps could not agree one hundred per cent with him that as long as he felt he should be putting grievances rorward we should not vote supply. However, we are simply arguing about the means now. So far as my own estimates are concerned, I will bring them on at any time that may be found convenient to the house. I suggest that we try to get enough departments in now so that we can have an orderly consideration of the various departmental estimates.


Stanley Howard Knowles: As a matter of information, may I ask what other departments it is intended to put in today?


Walter Edward Harris: It is intended to call fisheries, labour and external affairs but in view of the discussion perhaps we could add finance to that list.


Solon Earl Low: Mr. Chairman, if the government would substitute finance in order to bring the estimates of that department forward more quickly, we might give it consideration.


Walter Edward Harris: Fisheries and
labour particularly were mentioned quite a long time ago, and the ministers have been ready on every occasion since to take up their estimates. I think the hon. member might agree to those of which notice has been given. In order to accommodate him we could then call finance and get it in. Then the Minister of Finance could take up with the Prime Minister the matter of the best order of business to meet the hon. member's wishes.


Solon Earl Low: I think it is too much to ask to
introduce six departments. I would ask that finance be substituted for one of the others. I am anxious to hear the Minister of Labour and the Minister of Fisheries. I like to hear them go through their estimates because they do a good job, but they are not worrying themselves sick about getting them in right away. If you will substitute finance for one of those departments, and the Minister of Finance on his word will bring forward his department at an early date, I will be prepared to concede.


George Alexander Drew: Mr. Chairman, I must admit it is a most remarkable development to have very strong opposition to the introduction of five departments and then agreement to six.

25G7


Solon Earl Low: I did not agree to six, Mr. Chairman. I want to state the matter clearly.
I said, if the government would substitute.


Douglas Charles Abbott: Let us call five and we will
move to introduce finance next Monday.


Solon Earl Low: I simply said if the house leader will agree to substitute finance for one of the others he is seeking to call I will agree, but not until.


George Alexander Drew: I do not want to extend the
discussion of this matter. I understood from what had been said that it was a case of adding finance. Whether or not that is so,
I might point out that if finance is going to be discussed then the calling of the Department of Finance offers that opportunity. Rather than argue as to what should or should not be introduced, although we did oppose calling five departments, I think it would be well at this point to go ahead with the five in view of the fact there has been a general understanding that that was what was to be done.
DEPARTMENT OF FISHERIES General services-
140. Departmental administration, $281,298.
Item stands.



DEPARTMENT OF LABOUR

[Stage Direction]
General administration-
185. Departmental administration, $558,397.
Item stands.
DEPARTMENT OF EXTERNAL AFFAIRS Department and missions abroad-
84. Departmental administration, $2,272,597.
Mr. Graydon:: I should like to ask the house leader at the moment what is proposed with respect to the estimates of the Department of External Affairs. Will there be a separate motion later to refer them to the standing committee on external affairs; and, if so, when is it proposed to move that motion?


Mr. Si. Laurent:: As soon as possible.


Walter Edward Harris: When the hon. member was not here I pointed out that we would call this item in order to present the motion to send these estimates to the special committee, and we will do that at the earliest convenience of the house.


Gordon Graydon: But not right now?


Walter Edward Harris: No.


George Alexander Drew: I think it would be desirable to have some indication in advance as to when the motion to present these estimates to the standing committee is going to be moved. In view of the fact that they are to be
Supply-External Affairs referred to the committee, I would imagine that there will not be an extended debate at that stage, but nevertheless I am aware that there are some members who have indicated a desire to make certain statements at that time. I was under the impression also that the Secretary of State for External Affairs had indicated to one member that he intended to introduce this motion on Thursday. I do not know whether there was any understanding on the part of the government to that effect.


Walter Edward Harris: I should not say anything without knowing what the Secretary of State for External Affairs said, but we will let the leader of the opposition know as soon as we can determine it.


George Alexander Drew: Perhaps it would be best
if there could be some discussion before we adjourn this evening, and if it is to be Thursday it would be well to indicate that tonight.
Item stands.
Progress reported.



WAYS AND MEANS

[Stage Direction]
The house in committee of ways and means, Mr. Dion in the chair.

[Stage Direction]
Resolved, that it is expedient to introduce a measure to amend the Excise Tax Act and to provide:
1.	That the rate of the general sales tax be increased from eight to ten per cent and that the rate of sales tax on those articles at present subject to four per cent be increased to five per cent.
2.	That the excise tax on goods mentioned in schedule I of the act, and on furs, that are at present subject to the rate of fifteen per cent be increased to twenty-five per cent.
3.	That the excise tax on candy, chocolate, chewing gum and confectionery that may be classed as candy or a substitute for candy, be reduced from thirty to fifteen per cent.
4.	That there be imposed, levied and collected an excise tax of fifteen per cent on the following goods when adapted to household or apartment use:
(a)	stoves, hot plates, grills and other appliances when adapted wholly or in part for cooking and when designed for using other than solid fuels;
(b)	washing machines operated by electric or other power;
(c)	electric, gas or kerosene refrigerators and freezing equipment and complete parts therefor including coils, condensing or compressor units, motors, cabinets, boxes, evaporators and expansion valves.
5.	That the excise tax on cigarette papers and cigarette paper tubes be repealed.
6.	That the excise tax on the following goods be increased by the amounts shown:
(a)	for each five cigarettes or fraction of five cigarettes contained in any package, three-quarters of one cent;
(b)	for each ounce or fraction of an ounce of manufactured tobacco, including snuff but not including cigars and cigarettes, contained in any package, three cents;
[Stage Direction]
Excise Tax Act
(c)	for each ounce or fraction of an ounce of Canadian raw leaf tobacco when sold for consumption in Canada, three-quarters of one cent.
7.	That the sales tax on the following goods be repealed:
(a)	cortisone;
(b)	adrenocorticotrophin (ACTH).
8.	That any enactment founded upon this resolution be deemed to have come into force on the eleventh day of April, nineteen hundred and fifty-one.
Mr. Shaw:: The resolution now before us contains eight separate and distinct propositions. When this matter was considered last week an effort was made by certain members of the house which would have made it possible to obtain a decision upon each of these propositions. I was amazed to encounter opposition to that procedure. I have endeavoured to determine to my own satisfaction at least why so many members of this house were so completely opposed to taking these propositions separately. I have come to the conclusion that obviously there are members on the government side who are just about as unhappy as I am about some of the propositions contained in this resolution. I am certain a great many members on the government side had indicated to their constituents that they regarded the sales tax as an iniquitous tax. I am personally convinced, and I base this opinion on a certain amount of knowledge, that there are members on the government side who had assured their people back home that they would oppose any increase in the sales tax. Now in supporting it, if it is their intention to support this resolution, they are going to give this explanation: "Well, in order to have the excise tax removed from cortisone and ACTH, I simply had to support the increase of 25 per cent in the sales tax. Surely you would not want me to penalize the poor arthritics by voting against the removal of the sales tax from ACTH. Therefore I had to support the increased sales tax." Then I can imagine them saying, "Surely you would not want your little children penalized by a 30 per cent excise tax on candy, chocolates and certain confections. I feel the same way about it, so in order to support the 15 per cent reduction in the excise tax on candies and chocolates for your little children I had to vote for the imposition of a tax on washing machines, stoves, hot plates, grills and similar commodities not burning solid fuels. And the sales tax-". Then I can just imagine them saying this, because it has been said before; it has been a beautiful out for some people: "You wanted me to vote to remove the excise tax on cigarette papers and tubes. The only possible way I could do that was by voting at the same time for a hefty increase in the tax on cigarettes 
and tobacco." If there could be any other reason for certain members of this house voting for a decision which in effect makes us decide upon eight distinct and separate propositions in one vote, I for one would like to know it.
Last week some pretty strong words were used to describe this sales tax, and it is with respect to the sales tax that I have the greatest criticism to offer. Before doing so, however, I am going to make my position perfectly clear. I dislike the sales tax so intensely that I am fully prepared to vote against everything else in this resolution in order to oppose the increase of 25 per cent in that tax. It is a pretty uneven- bargain, even for those who may take the position I indicated earlier. The trade is most unequal. In order to obtain those reductions which this resolution offers I am not prepared to heap upon the shoulders of the people I represent an increase of 25 per cent in the sales tax, when I know that the words used in this house last week to describe that tax are the words being used by a good many of the people I represent. Several speakers called it a vicious tax, and I agree with that description. They called it iniquitous, infamous, insidious and pernicious. That is quite a collection of words, but if ever anything required all those words to properly describe it, it is this sales tax. In my opinion this tax is a violation of the basic principle of taxation, namely that we give some consideration to ability to pay. I have always said at least one thing in favour of the income tax; it does recognize the principle of ability to pay. But I realize we are not discussing that tax on this occasion.
The sales tax goes right into the pocket of the poorest man or woman in the land, those who are struggling and in all too many instances finding it utterly impossible to acquire those things which make up at least a half decent standard of living. I dislike the sales tax because it is hidden. I characterize it as a bandit; I say it is the subversive agent in our whole tax structure. Governments have indicated pretty generally that they like such taxes. They are less painful. The pocketbooks of the people are attacked and they are not always conscious of the fact that a substantial portion of the purchase price of a commodity is made up of excise and sales taxes. There is not a certain day in the year upon or before which they must make a sales tax payment. Practically every time an individual walks into a store he is attacked, as it were, by a government through the process of the sales and excise taxes.
I am surprised that the parliamentary assistant to the Minister of Finance (Mr. Sinclair)

who seems to enjoy going elsewhere to find examples of people who are worse off than we are-he did that so far as the income tax was concerned-has not gone to Russia and told this house, "Look at the heavy sales tax paid by the Russian people; seventy-five per cent on certain clothing; sixty to sixty-five per cent on certain foods." As I say, I am surprised he has not done that. It would, of course, and quite naturally, provide slight comfort to the people of our country who are compelled to pay that tax.
Speaking the other day on this same resolution my leader suggested that this sales tax is a very important factor in the increasing cost of living to those in the low income groups. Is there anyone who can honestly argue that is not a fact? He said that it was pyramiding these prices. I agree, and 1 do not like it for that among other reasons. It is pyramiding the price of a commodity far beyond the actual amount of the tax itself. I know what the parliamentary assistant said about that question, and he has undertaken to put the member for Moose Jaw in a position where he is to answer the question for the parliamentary assistant. All facts direct us to one conclusion, namely that that sales tax does have a pyramiding effect. Is there anyone, Mr. Chairman, who can argue that this sales tax is not inflationary in its effect? I doubt if a logical argument can be advanced by anyone to the contrary.
Then, as I have pointed out already, and as my leader has pointed out many times, it is a hidden tax which makes it all the more pernicious. I well recall that in his remarks he said that governments seemed to be moving faster and faster towards the state of affairs where most of their taxes are hidden. I do not know that I can blame a government for doing that, but certainly I for one insist that more and more of these taxes be brought out where the Canadian people can see them and know exactly what they are paying. We have already referred to those various groups in the country who are hardest hit by this type of tax. Only yesterday I had occasion to refer to them. It is not necessary to go into detail so far as our 282,000 old age pensioners are concerned; it is not necessary to go into detail about the 10,517 blind pensioners within the country; I should not have to mention the widowed mothers again or the pensioned civil servants or the recipients of war veterans allowance or military pensions. I should not have to refer, although I am going to do so for a moment, to those wives and dependents of the men who today are serving in the armed forces of this country. This sales tax is going to take another bite out of an income which is wholly inadequate for the dependents of these men now on active
Excise Tax Act
service. Every day I receive letters from these people. We have no provision, as we had during world war II, to grant special financial assistance in cases of emergency. I do not want to digress and run the risk of the chairman ruling me out of order.
Now, in connection with another tax to which this sales tax is closely related, namely the income tax, the government constantly boasts of the fact that we have within this country thousands of wage earners who are entirely outside the provisions of that act. But let me make this assertion without fear of contradiction, that there is no one in this country who spends anything who escapes income tax, because the sales tax is in essence the poor man's income tax, and incidentally with no exemptions, Mr. Chairman. There are no exemptions in the case of commodities on which the sales tax is imposed. I would grant that the sales tax does not apply to a certain number of commodities, but it does apply to clothing, a commodity which enters into the cost of living of every family in the country. The larger the family the more severe is the effect of that tax upon them. Anyone who examines the last cost of living statistics will agree with me that the cost of clothing has practically doubled since 1989. If that were all, it would not be quite so bad, but anyone knows that the quality of the clothing has deteriorated to the point where it will not last, so far as children's articles are concerned, half as long as it would ten years ago. There was a day when I could buy a pair of overshoes for one of my boys and be reasonably certain that they would last him two winters. If you have boys of ten, eleven or twelve years of age, you realize that you are now lucky if they can get through one winter with a pair of overshoes. I bought more than that during this last winter.
There always seems to be a difference between a Liberal who forms part of the government in power and a Liberal who sits in the opposition. I happened to be browsing through Hansard the other day in reference to the sales tax, and I thought it might be a bit enlightening if I were to go back to the time when the Liberals formed the opposition. The last time that happened was 1930-35. The other day it was stated that by the time the Liberals were defeated in 1930 they had brought the sales tax down to one per cent. By 1934, it was back to six per cent. It is a revelation to read what the Liberals said about that increase of five per cent during that period of time, as it relates to clothing. I happened to find this in Hansard attributed to the late Mr. Ralston who was acting as

Excise Tax Act
financial critic tor the official opposition in 1934, and it is on page 2424 of Hansard. It reads:
-it is over sixteen years now,-
He means that the war has been over that long.
*-and the sales tax is still on, but the man who buys a $30 suit of woollen clothes is not paying only 90 cents to the government today; he pays $1.80 under the taxation imposed by my hon. friend, the Minister of Finance. Before the King government went out of power the tax had been reduced to one per cent and the tax on the suit of clothes was only 30 cents, but the sales tax is still here, the iniquitous sales tax which my hon. friend, the present Secretary of State (Mr. Cahan), proposed to have removed. This iniquitous sales tax and the poor man's income tax is still here and has been multiplied by six under the present government.
One reason for this rather violent attack upon the sales tax was the fact that it added $1.80 to the cost of a man's suit of clothes. Thanks to this government, when you go down to buy a suit of clothing today at $50, $60, $70 or $100, and work out your 10 per cent sales tax on that, you can think how justified we would be, feeling as the late Mr. Ralston did toward the sales tax at that time, in just screaming to high heaven today about that $7, $8 or $9 sales tax on one suit of clothing. I only quote that to show you that obviously Liberals in office are a bit different from Liberals in the opposition.
When the Minister of Finance referred to the sales tax in his budget talk, he used two words which I hope every member on the government side of the house will always remember. Then I am going to ask if you believe them. First he said that raising the $100 million additional revenue from the sales tax was "the sound thing to do from an economic point of view." I underline that word "sound." Then he said that it was "the fair thing" to do "at this time", and I underline that word "fair." I hope that the members of this house who support this resolution containing that 25 per cent increase in the sales tax will, when they go back to their constituencies and are talking to their constituents, say to them: I supported the sales tax because I too considered it to be sound and fair.


Mr. MacDougall:: Robert Fair?


Frederick Davis Shaw: I doubt if my friend the hon.
member for Battle River would be associated with a thing of this kind. I am going to quote once again, Mr. Chairman, just a few words, because there is certainly no sense in going back and reading some of these things if one does not give to hon. members of this chamber the benefit of his research. The late Mr. Ralston was again speaking in the House of Commons-this is in 1931-and,

mind you, he was airing the views of the Liberal opposition. He was then their financial critic. As reported at page 2302 of Hansard of that year, he said:
This is a tax, as the Secretary of State has said, which bears heaviest on the man who feels the pinch most at this time;-
I will come back to that phrase "at this time."
-it is a tax which affects most directly the cost of living in this country. I fedl, Mr. Speaker, that the use of the sales tax at this time is a measure which cannot be defended in view of the other possible sources of revenue which my right hon. friend might have touched.
Someone may quickly say he used the words "at this time", a depression year, although in 1931 the depression had not become as severe as it became two or three years later. But let us never forget that there are in this country today thousands of people who are going through their own depression which to them is just as disastrous as anything they encountered in 1931. In those years, it is true, people had low incomes, but prices also were low. The income of today, as compared with the income of that time, actually leaves a man in a more unfortunate position today than that in which he was left at that time. As I say, the late Mr. Ralston laid great stress upon the fact that the sales tax could not be defended, on the ground that there were other sources of revenue which could have been touched. That is exactly the position I take at this time. The Minister of Finance, the parliamentary assistant to the Minister of Finance and the officials of the Department of Finance cannot honestly assert that there are not other sources which could be touched at this time. All of this argument which centred around liquor rather made me smile, but I will not go into that matter. Would the government not be justified in touching the amusement tax field rather than a little pair of overalls worn by Johnny Smith?


Mr. Gibson:: The provinces have that.


Frederick Davis Shaw: That is all right. During the
last war this government jumped into that field.


John Lambert Gibson: Shall we take it away from
the provinces?


Frederick Davis Shaw: No. I am not suggesting that we take it away from the provinces. I am suggesting that, rather than go down into the pocket of the poor man in this country, the government might impose a bit more taxation upon amusements of one kind and another. I am always rather intrigued by these references to the capital gains tax. I

realize that there are arguments against it; but, Mr. Chairman, I suggest that there are many things that I would do, even though I might not like them too much, before I would go down into the pocket of the fellow who today is going through a great deal of misery in an effort to provide for his family.
There was one other matter to which I wished to refer. I should not suggest that I could be out of order, Mr. Chairman; I should not give you any ideas on that score, because when it comes to that, you have plenty of ideas yourself. In the course of the consideration of the sales tax, certain hon. members have asserted that other things could have been done rather than to have increased the sales tax. Some hon. members asserted that the government might have lifted the income tax a little more in order to offset the need of the sales tax. The minister asserted that it would hurt too much if you hit them a little too hard at one time. In 1933 the former minister of finance, Mr. Ilsley, who had frequently attacked the sales tax during those years the Conservatives were in office and were increasing it, said that instead of imposing an iniquitous tax of this kind the government would be justified in taking a man's entire income from him over and above a certain amount. I will not quote his statement because I hardly think that would be in order; but it may be found at page 3495 of Hansard of March 28, 1933. I only pass on the observation, not that I am advocating that a man's entire income be taken away from him; I did it to show the difference between a Liberal who is a member of the government and a Liberal who finds himself on the opposition side of the house.


An hon. Member:: How does that work out?


Frederick Davis Shaw: Mr. Chairman, if there are to be interjections, I hope they will be loud enough so that I can at least hear them.


Mr. Laing:: What was the total budget at that time?


Frederick Davis Shaw: An hon. member asks what the total budget was. It is not a matter of the total budget; it is the total tax revenue in relation to the national income. It is the relationship between what the government is taking from the pockets of the people and the national income of your country. And if my hon. friend takes the figures in those days and compares them with the figures of today, he will find that the tax hurt proportionately as much at that time.
In conclusion, I am going to re-assert one or two things that I said at the beginning. I dislike the sales tax so intensely that I for
Excise Tax Act
one am opposing this resolution; I am not supporting any 25 per cent increase in the sales tax at this time-that is a favourite government expression. I am not supporting the 10 per cent increase in the excise tax, as applied to a long list of commodities. But let me point out that my principal reason for opposing the resolution as such is first of all the sales tax. I know that as long as the present government occupies office we are going to have to contemplate from time to time rather stiff increases in taxation. I am going to be perfectly fair to them and also say that as long as the international situation is such as it is, we are likely to have that inevitable result. I am not going to take such strong opposition with respect to the other commodities listed here and the taxation increases in relation thereto, but I am taking a very firm position as far as this sales tax is concerned. As far as I personally am concerned, I am opposing this resolution which is proposing to amend the Excise Tax Act.


Stanley Howard Knowles: I am sure the parliamentary assistant does not want the resolution to carry before he has had a chance to answer some of the questions put to him the other night. He will recall that the hon. member for Lake Centre put a certain question to him, which I elaborated. It had to do with the effect of the tax changes involved in the Excise Tax Act proposals on the cost of living of what might be called the average Canadian family. I do not think I need to go into detail again in the way in which I set it out before the parliamentary assistant the other night, unless he asks me to do so. Perhaps he can answer that question now.


James Sinclair: The hon. member for Lake Centre asked that as well as the table that I put on the record from the dominion bureau of statistics showing the percentage of income in various groups which was subject to sales tax, I should also try to obtain from the dominion bureau of statistics what this increase in sales tax and excise tax actually meant in dollars and cents to families in various income groups. We got in touch with the dominion bureau of statistics and they said it was impossible for them statistically to work out such a thing. They could work out the percentage of income which is subject to tax just by using the analysis they had in 1947-1948 of how families in various income tax groups spent their money on the commodities. The mathematical problem of determining what this two per cent increase in the sales tax, the ten per cent increase in the excise tax and the fifteen per cent increase on electrical appliances means in dollars and cents to the individual

Excise Tax Act
consumer is tied in, as I indicated when I was answering the hon. member, with the problem of mark-up. Unless the mathematical analysis over in the dominion bureau of statistics gives the mark-up in each of the various commodities there is no real base to submit a mathematical figure. For that reason they said it was impossible to do better than they have done by breaking it into percentages.
The hon. member for Lake Centre seemed to think that I had such figures with me. Probably the reason for his supposition was the fact that one of the members of the press gallery had an article in one of the Toronto papers with his calculations of what this would amount to. I have spoken to him. These are his calculations based actually on the break-down which I put on the record, and which he had obtained previously from the dominion bureau of statistics.


Stanley Howard Knowles: I suppose we have to take it that the dominion bureau of statistics is unable to answer that type of question. Frankly that does amaze me. I can understand the bureau not knowing in advance what the additional effect of mark-ups might be, but it does seem to me that it should be able to compute what the increases in the cost of the articles included in the cost of living index will be as a result of the tax itself.
As I understand it, there is nothing mysterious about the way in which this cost of living index figure is arrived at. I understand that when the 1935-39 base of 100 was arrived at, it was ascertained on the basis of what it actually cost in that 1935-39 period to purchase a certain total basket of goods and services, which was taken to be the standard of living of an average Canadian family at that time. I understand that the way in which the cost of living index is adjusted is for the dominion bureau of statistics to find out each month what that same original basket of goods and services costs. The original cost in the base period was $1,453 a year. Since the cost of living index now stands at something over 180-we will know the exact figure in a day or two- it means that that basket of goods and services is already well up over $2,000. My colleague, the hon. member for Melfort, put the exact figure on the record yesterday.
Well, now, the dominion bureau of statistics is ascertaining information of this kind every day. They put out releases of one kind and another literally every day, and give a very good service in the statistical field. It seems to me that all they have to do to answer the kind of question that I put to

the parliamentary assistant is to go over the goods and services that are included in the original basket, and ascertain how much was added to their price on April 10 by the taxes that were imposed by the minister that night.
As I pointed out when I spoke on this question the other evening, every time the cost of the goods and services in that original basket goes up by $14.53 it means an increase in the cost of living index by one point. Hence I felt it was a perfectly proper question for us to ask as to how many dollars and cents the average Canadian family will have to pay additional on the necessities of life by virtue of the taxes that have been imposed. If the dominion bureau of statistics did the job they would of course do it in relation just to that same original quantity of goods and services. Many Canadian families have rightly a little higher standard of living than was suggested by that 1935-39 basket of goods and services; therefore, to many people the additional cost will be even more than would be the additional cost on that original basket.
I am sure that it is a minimum guess that we make when we suggest that the sales tax and the other taxes in this resolution are going to result in an increase of $40 or $50 in the necessary expenditures of the average Canadian family per year. I may be away out, Mr. Chairman, but if I am, I am away out on the conservative side. It may be twice that amount. But if it means an increase of around $45 in the year, the result will be a rise in the cost of living index of three points.
We were given to understand that this budget was going to deal with the problem of inflation. That was one of the arguments against our starting a certain other debate, which I shall not discuss now. But this is the way, as it strikes some of us, that the budget deals with inflation; it aggravates the problem. We have before us proposals for tax increases on commodities which cannot fail to have the effect of boosting to a higher point the cost of living index. People from coast to coast were shocked with the 4-5 increase on the last occasion the figure was given. We will be receiving another figure in a day or two which will push the figure up from 179-7 to 182 or 183; and in the course of a few months we will have the effects of this budget pushing it up to 185 or 186. The people of Canada will wonder just where this is going to end.
I appreciate that the parliamentary assistant has been in touch with the dominion bureau of statistics, has sought to get the information and has been unsuccessful. But I notice he is discussing the matter-

or discussing something, at any rate-with his officials, while I am talking. I would be glad to have his comments on what I have been asking. Does it not seem to be a reasonable conclusion tor us to draw on this side of the house that the effect of this eight-point resolution we are now asked to vote upon is likely to be an increase in the cost of living index of two, three or more points?


James Sinclair: Mr. Chairman, I do not see
how I can answer more fully than I have done. I have mentioned the factors the dominion bureau of statistics pointed out. The hon. member has said that it should be easy for the dominion bureau of statistics to price today the price of this basket. That is true. They actually have not done it as yet for the month of April, but they will do it.
However, apparently the hon. member intends to go ahead on the assumption that every increase since April 10 is consequent upon the tax increase, and not consequent upon an increased cost of material and an increased cost of labour. That is the problem the bureau of statistics has to contend with -and it is a bureau of statistics, not a guessing bureau.
The second point, so far as the effect upon spending is concerned, is that there is a change in buying methods which the housewife will use, when prices go up. If the price of a frock is increased, she will be content to keep within her budget and to buy a cheaper frock.
I think the figures the hon. member has been quoting are obviously out, when it is remembered that it is the sales tax on commodities which hits the lower income group, rather than the excise tax on luxuries or semiluxuries. If, as he says, the two per cent increase will cost $45, that means that the whole 10 per cent will cost $225, so that the person paying this $225 tax must be buying $2,250 of commodities subject to sales tax, and no low income family does this. So that the hon. member's increase by reason of sales tax is far out of line.
But the dominion bureau of statistics is not in the guessing business. They deal with facts, the cost of these things. When the April cost of living figure comes down the change may or may not be due-whatever changes there are-to the increase in tax. But there will still be other factors which have increased the cost, such as increased labour costs and increased material costs.
I have done my best to obtain these figures from the bureau. They say the only thing they can give us is statistics based upon
Excise Tax Act
actual facts. That is what they have given, and the table I inserted earlier in Hansard gave that information.


Stanley Howard Knowles: I appreciate the table the
parliamentary assistant put on Hansard. I have looked into it, but he will realize it does not deal with the matter we have raised at this time.
I would point out to the parliamentary assistant that the sales tax increase is not the only tax included in the resolution now before us. The eight-paragraph resolution now before us includes the tax on refrigerators, electric stoves, washing machines and the like. I would remind him also that it was he, himself, who said that one of the difficulties of computation would be because these taxes may involve additional markups. So when he looks at my $45 figure he will have to consider not just the effect of the tax itself, but the effect of the tax plus the mark-ups made on it.
I was interested in one of the comments made just now by the parliamentary assistant to the effect that people's buying habits change. He spoke particularly of the housewife. He said that when a housewife goes into a store and finds prices have got out of line she will buy something else, because she cannot afford to buy the article that has gone up to the increased price.
That change in buying habits is not reflected in the cost of living index. The cost of living index is not changed because of change in people's buying habits, whether they raise or lower their standard of living. The parliamentary assistant has said that, so far as the cost of living is concerned, the bureau of statistics does not guess; it gets the actual prices.


James Sinclair: You are talking about how
much extra a person was going to pay. Let us separate the two.


Stanley Howard Knowles: I was talking about the
effect of the resolution now before us on the cost of living index. We are getting two or three points mixed up. The point I was discussing just now was that the effect of the rise in the cost of living index has changed the habits of many people. Indeed it has; it has lowered their standards.
I suppose in the present instance the people of Canada have no alternative but to wait until bitter experience has shown just what the effect of these proposals is on the cost of living. For my part I cannot see that this section of the budget has grappled with the problem of inflation or the cost of living in any way, except to make it worse.

Private Bills
There are some other points I should like to mention in connection with the sales tax, so perhaps we might call it six o'clock.
At six o'clock the Speaker resumed the chair and the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at eight o'clock.

[Stage Direction]
The house in committee on Bill No. 177, to incorporate the Mercantile and General Reinsurance Company of Canada Limited- Mr. Cavers-Mr. Dion in the chair.
Sections 1 and 2 agreed to.
On section 3-Capital stock.
Mr. Cruickshank:: Mr. Chairman, under
this section it is provided that the capital stock of the company shall be $1 million. Would the sponsor explain to me what denominations the shares are to be? Are they to be $100, $500, or what? I understand that the company is to operate in all ten provinces, and I presume the idea would be to have the capital stock distributed as widely as possible among the people of the various provinces. One of my colleagues has suggested to me ten shares of $100,000 each. That is the very reason I should like to say a word on this matter. I understand it is more or less a trend of modern financing- and I know very little about financing-particularly with such companies as this one, to have the capital stock distributed as widely as possible in small denominations in order that the people of the whole dominion will be able to share therein. I presume one reason would be to gain the good will of the people of all the provinces.
Certainly in a company such as this one I would think it would be to their advantage to have the stock issued in small denominations instead of $100,000 shares so the people throughout Canada can purchase the shares. I should like the sponsor to explain to me how it is intended to dispose of the shares. Surely it is not to be, as one of my colleagues has suggested, ten shares of $100,000 each. Possibly it is $50 shares. Would the sponsor explain that point?


Mr. Cavers:: Mr. Chairman, I am informed the shares are to sell at a par value of $10 each, and on the matter of the subscription of shares the company must have $250,000 of capital stock subscribed before undertaking any business.


George Alexander Cruickshank: The answer is partly
what I wanted. I was very careful not to mention the figure of $250,000 as that is in the next section, and I was afraid I might be called to order.


Joseph-Alfred Dion: That is section 7.


George Alexander Cruickshank: No, I am speaking on
clause 3.


Joseph-Alfred Dion: Yes.


George Alexander Cruickshank: I am afraid the sponsor was out of order in referring to the next section. I was being very careful not to be out of order, not to transgress by saying anything about section 4. I understand his explanation.


[Stage Direction]
Section agreed to.
Sections 4 to 8 inclusive agreed to.
Preamble agreed to.
On the title.
Mr. Herridge:: Before the title carries, if I am in order I want to bring something to the attention of the house. The title of the bill is "An act to incorporate the Mercantile and General Reinsurance Company of Canada Limited." We have no objection to that but I think the government should do something about making certain that companies using the words "Canada limited" are companies that have a federal charter, because that has caused a great deal of misunderstanding among a number of people in my constituency. I refer to the Home Assurance Company of Canada Limited which went into liquidation in 1948. A large number of people in my constituency purchased shares in that company on the understanding that it was a federal company because the words "Canada Limited" were in the title. They thought they were protected by the particular scrutiny of the federal superintendent of insurance, and so on.
These people purchased these shares years ago. There are older people in my riding, just about ready to draw the old age pension, having very few material assets in this life except hope, who bought these shares, a considerable number of which were paid for and some were not paid for. Throughout the years they have had favourable balance sheets indicating that the company was in a wonderful position, and then suddenly it went bankrupt. These people had been under the impression all the time that they were protected by a federal charter. The liquidator of the company is now attempting to collect the balance of the amount payable on certain shares from people over 70 years of age with very little but their homes as assets.

I wish to point that out because I believe that the words "Canada Limited" should not be awarded to any company unless it has a federal charter. I could deal at some length with this matter but I do not want to delay the passage of the bill. I want to bring the matter to the attention of the house because I think it is a point that is worth considering. It involves considerable hardship for a number of very worthy citizens whom I represent who were deluded into investing in what they thought was a company with a federal charter with all the greater security behind that, and who later found that they had invested in a provincial company registered in Alberta and doing business in British Columbia, Alberta, Manitoba, Ontario and Quebec. I think that some consideration should be given to the question of the names of these companies so that people who invest in them will know exactly what they are doing and that the name means something when they read it.


George Alexander Cruickshank: I should like to say something about this matter. I am glad that the hon. member for Kootenay West brought it up. I have not had an opportunity to consult with the sponsor of this bill, and I do not know that I would be in order if I were to move an amendment changing the name. I quite agree with the hon. member for Kootenay West that the present name might mislead a small speculator. You know, we are not all from St. James street or Bay street, or whatever the name is of the winding alley in Winnipeg. Some of us come from small country districts, and when we see the word Canada we are impressed.
Perhaps I could explain better this way. Some years ago a former member of this house sent out on our high-class House of Commons stationery a prospectus for an oil company, or perhaps it was a gold mine. I am glad to say he came from the other side of the house, but I am sorry to say he came from my province. There was the crest; there was the name Canada, and people with annuities or perhaps with small amounts of money to invest would buy those shares in good faith as a result. I am not saying for a moment that this is not a genuine company. I have no doubt that in time it will be very successful. In the meantime, however, we should not do anything that might mislead people out in the hinterland, such as those in Comox-Alberni, where very few people have had much experience in finance.
I do not want to take up much time on this bill, but I understand that in this very chamber a great deal of time was taken to discuss the question of whether the word "cola" could be used with the word "Pepsi"
Private Bills
in a trade mark. I believe, as the hon. member for Kootenay West says, the people of Canada should be fully protected at least until such time as this company has a dominion charter. Perhaps the company could secure the charter and later have their name changed to the Reinsurance Company of Canada Limited, in order to get it all in; but first they should obtain a dominion charter. I believe we should take a Tittle time to consider such an important matter as this. I am not allowed to refer to the other sections now, but there are sections of this bill which would not mean half as much to the investing public of Canada as the name of the company, particularly those not well advised on finance. I took some advice on stocks from a learned colleague who is well up in finance. He is well up, and now I am well down, having taken his advice. In that case I was acting on his judgment, and in this case small investors may act on the strength of the name.
As I have said already, there is a great deal of merit in the suggestion of the hon. member for Kootenay West. That is usually the case; he comes from a very fine province. So I think the house should pay particular attention to what he says. I do not want to delay this bill or to delay the committee longer, so I will only repeat that I concur entirely in the remarks of the hon. member for Kootenay West.


Mr. Green:: May I ask the sponsor in which provinces it is proposed to register this company?


Harry Peter Cavers: I understand it is proposed to register it in the dominion and in Ontario, but the business of insurance will be carried on in all the provinces.


Mr. Coldwell:: I do not know whether or not the matter I have in mind was discussed on second reading. The name of this company is Mercantile and General Reinsurance Company of Canada Limited:, but I can see nothing in the bill which would suggest that the business of the company is to be confined to reinsurance. This bill gives the company the right to carry on all kinds of insurance. I believe the general public would consider a reinsurance company to be particularly strong; that is the impression one gets. The weaker companies take out insurance and reinsure with stronger companies. Many companies, for example, reinsure with Lloyd's, and the name of this company conveys the impression that here we have a company somewhat similar to strong companies such as Lloyd's, doing a reinsurance business. When we look at the bill we see that the paid up capital is not very large; yet the impression

Private Bills
conveyed is that this is a strong company with great assets, large reserves and large capital, doing a reinsurance business. I do not think that impression should be conveyed by the name of a company which is just starting business, with a limited capital and with the paid up capital only a quarter of the total authorized by this bill.
I suggest that is a point to which the committee might be well advised to give some attention. From time to time over the years we have had difficulties with the names of insurance companies. Perhaps the sponsor of the bill can say something to put my mind at rest in this connection, but as the matter stands at the moment I would be inclined to oppose adoption of the bill until such time as we have some further explanation or even a new name, which would remove what seems to me an objectionable feature of the bill.


Harry Peter Cavers: The hon. member for Rose-town-Biggar is quite correct in his interpretation of section 6 of the bill, in which the powers of the company are not limited to reinsurance. I am informed, and I can inform the committee, that in the beginning the company intends to conduct a reinsurance business solely, but they do not wish to limit their powers to reinsurance because as time goes on they intend to carry on other types of insurance as well.


Major James William Coldwell: The point I had in mind was exactly what the hon. member says, that this does suggest that the company is going to engage in general insurance. There is nothing in the bill which says its business will be only that of reinsurance, and that is the point I am making. The powers granted in this bill are those which would be granted to a company doing a general insurance business, and there is no mention anywhere of reinsurance, whether the initial business will be in reinsurance or whether it will be in general insurance. On the other hand there is every indication that the company intends to engage in a general insurance business. It is for that reason also, having in mind the amount of capital in the bill, it seems to me there is an objectionable feature in the name, reinsurance.


George Alexander Cruickshank: Mr. Chairman, as has been pointed out previously, one insurance company went bankrupt and caused a great deal of hardship to a great many people throughout Canada. As has been pointed out by the member for Rosetown-Biggar, in my opinion at least the name is misleading. What protection has an individual, not an investor in the capital of the company, but a policyholder in the insurance company? For instance, before we had such an excellent staff

as we have in charge of finance at Ottawa, we had a bank failure. Thousands of people in the Kootenays lost money, and I should like to know what protection there is. As I understand it, this company is going to carry on a general insurance business with a capital of $250,000. There are many individuals in the province of British Columbia who are insured for four or five times that amount. Of course, I will admit that is only one year's profit, but I should like the sponsor of the bill to tell us whether policyholders of this company will have the same protection as policyholders of the operating companies now have?


James Sinclair: Since the Department of Finance has been mentioned, I should say that federal incorporation, of course, does include supervision by the federal superintendent of insurance. That is the very point which the member for Kootenay West wants. I would suggest that the fact this company has "of Canada" in its title is a guarantee to those who are going to invest in the company or buy policies in the company that this is a federal incorporation and so subject to the federal superintendent of insurance. I respectfully submit, sir, that the member for Fraser Valley and the member for Kootenay West are arguing on different sides of the problem.


George Alexander Cruickshank: I am glad that assurance is on the record now, because that will be here not for today or tomorrow but for all time, that the parliamentary assistant of the Department of Finance has given the very assurance I wanted. Not only the people of Kootenay West and the people of Fraser Valley, but also the little man in Coast-Capilano will thank us for having secured that assurance from the Department of Finance.


Howard Charles Green: Will the sponsor explain why the word "reinsurance" is used in the name instead of the word "insurance"?


Harry Peter Cavers: In answer to that question, I may say that this company is a subsidiary of a company of the same name except for the deletion of the words "of Canada". It is an English company, and the same words were used in the incorporation of the company in Canada, except that the words "of Canada" were used to distinguish it from the parent English company.


Howard Charles Green: Does the parent company carry on a general insurance business?


Harry Peter Cavers: I believe they carry on general insurance as well as reinsurance.


Major James William Coldwell: Are the shares of this company to be in the hands of the directors of the parent company? Is this a subsidiary of the company to which my hon. friend refers?


Harry Peter Cavers: I understand that this is a subsidiary of the parent company.


Major James William Coldwell: Where is the parent company registered? Is it an Ontario company?


Harry Peter Cavers: I am not sure, but I believe they are registered in the province of Ontario.


Major James William Coldwell: It is operating under an Ontario licence, then?


Harry Peter Cavers: That is correct, Mr. Chairman.


Herbert Wilfred Herridge: I should like to point out to the member for Coast-Capilano that the member for Fraser Valley and I were not arguing in opposite directions. We were both going in the same direction, but at different angles. My point is simply this, that I do not believe any company using the words "of Canada Limited" in its title should be allowed to use those three words unless it has a federal charter.


Mr. Adamson:: May I ask the sponsor of the bill who the directors of the parent company are? Can he say?


Harry Peter Cavers: I am able to give the name of only one director of the parent company, and that is a gentleman who I understand is now residing in this country. I am not able to say who the other directors are.


Agar Rodney Adamson: I asked the question, Mr. Chairman, because there have been several United Kingdom and Scottish reinsurance companies that have moved out to do a Canadian business. I was wondering whether this was one of them, which was now seeking incorporation in Canada in order to extend its business in Canada.


Harry Peter Cavers: That is the general purpose
of the bill.


Major James William Coldwell: Can the hon. gentleman
give us some idea of the strength of the parent company? Can he tell us what the capital and reserves are of the parent company?


Harry Peter Cavers: Mr. Chairman, I do not know whether that falls within the discussion of this bill. We are now dealing with a company that is to be incorporated in Canada. This bill satisfies the superintendent of insurance who has dealt with the matter. I would say that this company should stand on its own feet in Canada.


[Stage Direction]
Title agreed to.
Bill reported.
Border Pipeline Corporation
Harry Peter Cavers: the third reading of the biU.


Mr. Speaker:: Is it the pleasure of the
house to adopt the motion?


Major James William Coldwell: On division.
Motion agreed to on division, and bill read the third time and passed.


BORDER PIPELINE CORPORATION
[Stage Direction]
The house resumed, from Tuesday, April 24, consideration of the motion of Mr. Robinson for the second reading of BiU No. 118, to incorporate Border Pipeline Corporation.
William Moore Benidickson: Stand.


Mr. C. W. Hodgson (Victoria, Oni.):: Mr. Speaker, I adjourned the debate on this Bill No. 118. Am I out of order in going ahead now?


William Moore Benidickson: Mr. Speaker, the sponsor of this bill is necessarily absent today, and I know he was relying on the ruling the Speaker made last year to be found on page 570 of the Journals for 1950, which in part reads as follows:
It has not been the custom in this house to proceed with a bill introduced by a private member unless that private member is here at the time. The procedure is similar to that followed in respect of bills introduced by the government. If the minister sponsoring the bill is not present, the bill stands unless the government indicates otherwise. It has always seemed to me that a private member should have the same right in respect of a bill which he has sponsored. I have given the matter consideration and I would be prepared to give a ruling.	.
I have never known of a private bill or of a public bill which has been introduced by a private member being proceeded with in his absence and without his consent.


Mr. Speaker:: In view of that ruling-


Howard Charles Green: May we speak on this point of order? I do submit that this particular biU is not covered by that ruling. In this case the sponsor has moved second reading, and on the last occasion on which the bill was before the house there was an amendment moved by the hon. member for Kootenay West (Mr. Herridge). The house is now considering that amendment, and the hon. member for Kootenay West is here this evening. I submit that the hon. member for Victoria, Ont. (Mr. Hodgson), who had the adjournment from the last time the bill was considered, should be permitted to proceed. At least we had a similar situation in connection with the Canadian-Montana Pipe Line Company, which came up for discussion here on April
6.	Your Honour will find that, as reported at page 1693 of Hansard, the bill had been reported back from the standing committee on

Border Pipeline Corporation railways, canals and telegraph lines and although the sponsor was not here, the bill was proceeded with in committee. There was a good deal of discussion and eventually the chairman reported progress and asked leave to sit again. That was done just last month. I submit that actually the measure is now in the hands of the house and that if the sponsor is not here tonight, that is his own fault. I suggest that a ruling to the effect that we cannot proceed with the debate at this time would not be correct.


Stanley Howard Knowles: Mr. Speaker, I wish to say a word on the point of order. I should like to draw to your attention the fact that the language that was used by the hon. member for Vancouver-Quadra (Mr. Green) is to be found in citation 323 of Beauchesne, third edition:
Every member is entitled to make a motion, but once he has moved it it is in the possession of the house . . .
Later on in that same citation there is this sentence:
When an amendment has been proposed, the original motion cannot be withdrawn until the amendment has first been agreed to, withdrawn or negatived.
In other words, it seems to me that this matter is doubly in the possession of the house. In the first instance, there was a motion for a second reading moved by the hon. member for Simcoe East (Mr. Robinson). Once he made the motion and it was put to the house, it became the property of the house. In addition to that, there has been an amendment by the hon. member for Kootenay West (Mr. Herridge), which was moved and seconded; and that amendment is now in the possession of the house.
Moreover, as has been pointed out, divorce bills are frequently proceeded with in this house when the sponsor is not present. In fact, we all recall occasions when we have asked questions of the sponsor of a divorce bill only to find that he was not here at all. That has happened with respect to other private bills. The hon. member for Vancouver-Quadra referred to another one just a short while ago.
I recall the ruling to which the hon. member for Kenora-Rainy River (Mr. Beniddckson) has just referred. I have not that volume here on my desk, but as I recall it, Your Honour had something a little more to say on that occasion. It seems to me that Your Honour said something to the effect that whatever was done, surely it would not be fair to the original mover of a bill to dispose of it finally; and I think that would be a matter of fairness and of common sense. But


on the other hand, is it fair to the hon. member for Victoria, Ont. (Mr. Hodgson), who wishes to proceed with his remarks on the amendment moved by the hon. member for Kootenay West, to deny him that right on this occasion? As I say, if the debate on the whole measure finally came to a conclusion and we reached the point where it was the right of the original sponsor of the bill to close the debate, and Your Honour felt that the house should not finally dispose of it in his absence, I think we should have to support you. But I do not see how Your Honour can prohibit debate along the way when those who wish to speak to it are here and wish to do so.


George Alexander Cruickshank: Mr. Speaker, I should like to speak to the point of order. I have not my copy of Beauchesne with me. Maybe someone will lend me a copy.


Mr. Fulford:: Have you your copy of Knowles?


Mr. Sinnott:: Have you Bourinot?


Mr. Speaker:: Order.


George Alexander Cruickshank: I could bring the Brock-ville telephone directory here. That is probably all some members would understand. But I can well remember being present when the hon. member for Winnipeg North Centre (Mr. Knowles) or someone spoke the other night. I can see the fairness of such a ruling if it was a question of bringing the matter to a conclusion; and I can assure you, Mr. Speaker, that I at least want to see this particular bill to incorporate Border Pipeline Corporation brought to a conclusion, as I presume every other hon. member does. But I want it to be brought to a satisfactory conclusion. I well remember that the other night, when the bill to incorporate the Cana-dian-Montana Pipe Line Company was under discussion, there was certain information that I particularly wanted to get. But that bill was proceeded with, a circumstance which was most embarrassing to me. I will admit that it is easy to embarrass me; but in this case it was particularly embarrassing for me because it threw me off my trend of thought when I could not get the answers to questions as I went along. Yet that bill was proceeded with, with no objection at all.
In this case, as has been pointed out, not only has the bill been brought before the house and been put into our care, through your gracious office, Mr. Speaker; but on top of that an amendment has been moved.
I do not think it is particularly fair to the sponsor of this bill that we do not proceed with it and possibly advance it just to the satisfactory conclusion; then he in closing

tne debate, for Instance, could make any amendments he desired to make; and we hope that he will make amendments. But if we do not advance it so far, I do not think it is fair to him nor do I think it is quite according to Hoyle, judging by what went on the other night with regard to the Canadian-Montana Pipe Line Company, when the sponsor of that bill was not here to answer the questions that I asked in order to enable me to bring forward further constructive arguments as to why this bill should be passed. If we delay the discussion of this bill tonight, there may be some point brought up tonight that will facilitate the passing of the bill, allowing it to become law.
I am sorry I have not Beauchesne, Lloyd's or any other authority before me; but if I had, Mr. Speaker, I think I could quote you a section that would cover this particular case. Before you give your ruling, I should like to point out that the other night, in connection with a divorce bill, the very same ruling as mentioned by the previous speaker was used as an obstacle to me. I do not think we can have soup in one dish and not in the other. I think that in some cases we must not go entirely by Beauchesne but rather by the rule of common sense. To me it is common sense to proceed when the bill has been debated in this house, first reading having been moved and adopted, and having been doubly adopted by having an amendment moved to the motion for second reading. Mr. Speaker, I think that you should rule that this particular bill be discussed tonight.


Angus MacInnis: Mr. Speaker, I shall be brief in what I have to say. In dealing with the matter of this motion, I think the particular purpose we should have in view is to protect the right of the sponsor of the bill. I agree that that should be done. But the mover of the adjournment of a former debate on this bill also has rights. What would his position be if, the next time this bill comes up for discussion, the sponsor is here and the mover of the adjournment is not here? Will the bill stand over until he is here? I think we should be careful how we deal with this matter. However, I think the rule provides that if the mover of an adjournment is not here, someone else may proceed in his place.
On April 6 the Canadian-Montana Pipe Line Company bill was up. The sponsor was not in his place, and there was no one who could answer questions. Along with the hem. member for Fraser Valley (Mr. Cruickshank) I objected to proceeding with the bill until someone could answer our questions. We had a good deal of difficulty to get the leader of
Border Pipeline Corporation the house that evening to allow progress to be reported and the committee ask leave to sit again. Therefore I think that the rights of the mover of this bill will be amply protected if the debate proceeds tonight, without disposing of the bill, and that he be given an opportunity to reply to anything that is said, and a vote taken when he is present.


Mr. Speaker:: I wish to thank hon. members for bringing to my attention these points, which are very pertinent to the point of order. I must admit that this question has given me some concern. I realize that the rights not only of the sponsor of the bill but of the hon. member who moved the amendment, and of all hon. members, must be protected. I did make a ruling on this matter on Friday, June 23, 1950, which was to the effect that when the sponsor of a private bill is not in the house the debate on that bill cannot proceed without his consent.
Tonight we have a case where the sponsor of a bill has requested, through another member, that the bill should stand. Now it has been suggested that because there is an amendment, the debate on the amendment should proceed, and that the mover of the amendment might be injured by not proceeding with the amendment. In this case, in any event, that would not be possible, because I believe the purpose of the amendment is to delay the second reading of the bill.


Howard Charles Green: No.


Mr. Speaker:: Therefore, he is not being injured in any way in that respect. Am I wrong? Notwithstanding, I will say that I have always considered that a private member who in sponsoring a bill stands in the same position as a member of the government who introduces a bill in the house. As hon. members know, when a government bill is introduced, it is introduced by a minister. There may be an amendment to that bill introduced by a private member. The discussion either on the bill or on the amendment does not proceed without the consent of the minister who introduced the bill. Why should a private member not stand in the same position? That has been the attitude that I have taken, and although I realize that it might appear that an injustice is being done, nevertheless I feel that I should not change the ruling which I made on Friday, June 23.
It has been said that the bill is now in the possession of the house, and that the amendment is in the possession of the house. That is so, and neither the amendment nor the bill can be withdrawn without the consent of the house. That also would be true of a bill introduced by a member of the government. A member of the government could
2580	HOUSE OF
British Columbia Telephone Company not without consent withdrawn his bill once it is in the possession of the house. As I say, I have given considerable thought to this. I think the rules of procedure might be amended. Until they are amended I feel I must abide by my ruling which I made on June 23, and allow the bill to stand.
Bill stands.


BRITISH COLUMBIA TELEPHONE COMPANY
[Stage Direction]
The house resumed, from Friday, April 27, consideration of the motion of Mr. Applewhaite for the second reading of Bill No. 116, respecting British Columbia Telephone Company, and the amendment thereto of Mr. Gillis.
Mr. Applewhaite:: Speaking to the point
of order as to whether the amendment is in order or not, I regret I must inflict on the house another discussion on a point of order. I am not speaking on the amendment or its merits. I would submit, sir, that the practice dealing with the handling in this house of private bills is clearly set out in the standing orders and the citations in that part of Beau-chesne, third edition, dealing with private bills; and further that the practice based on these standing orders and these citations is now established in this house by custom as well as by law.
In support of that statement I would refer Your Honour to citation 769, the appropriate part of which reads:
The expediency of a private bill, being mainly founded upon allegations of fact, which have not yet been proved, the house, in agreeing tp its second reading, affirms the principle of the bill, conditionally, and subject to the proof of such allegations before the committee.
It is the established practice in this house, according to the rule, that at the second reading the house will consider and pass upon the principle of the bill; that the committee to which the bill is referred under the appropriate standing order will be the judge of the facts upon which the application of the principle will or will not be based; in other words, the bill will or will not be passed. That process is set out in our own standing orders. What this amendment is asking the house to do is to put the cart before the horse, to reverse its own established procedure and to decide upon the facts before coming to a conclusion upon the principle of the bill. That I submit, Mr. Speaker, it cannot do.
It has been said by some hon. member-
I regret that I cannot credit him by name because I forget who it was-that the standing orders and the citations are there for our guidance, and that the least we can do is to fMr Speaker.]

try to be consistent in living up to them. Citations following citation 769-there are several of them-I put on the record at the time that I introduced the bill for second reading, and I do not intend to inflict them on the house again; but I will submit, sir, that they all carry out definitely the principle that I have tried to outline.
There is in Beauchesne, third edition, which is the last word on parliamentary procedure in so far as we are concerned, a special chapter entitled "Private Bills", and a section of the "Standing Orders" dealing with private bills. That is the chapter, these are the standing orders, these are the citations which must govern us at the moment.
I said, sir, that Beauchesne, third edition, is the last word which we have to refer to in matters of procedure. Beauchesne, in his third edition, quotes on several occasions with reference to private bills-and quotes with approval-Dodd and Wilberforce on "Private Bills Procedure", which says at page 20:
The house does not profess to decide upon the second reading as to the truth or otherwise of the allegations of fact upon which a proposed bill is based, and in conceding a second reading to a private bill the house is regarded as merely giving its sanction to its general principle on the hypothesis that the committee to which it afterwards is referred finds those allegations proved.
In Beauchesne we find citation 659 which reads in part as follows, after setting out at some length a case which was brought for decision:
The Speaker ruled this amendment out of order because it did not challenge the principle of the bill and it anticipated the committee stage.
That citation is in the part of Beauchesne which deals with public bills. I submit it is much more impressive when considered in conjunction with standing orders and citations dealing with private bills, as the amendment before the house does not oppose the principle of the bill and does attempt to anticipate the correct committee stage.
On anticipation, at page 273 of the Journals of the house for 1934 Mr. Speaker of that day, in ruling out of order an amendment proposed by the late Right Hon. W. L. Mackenzie King, said:
The amendment moved by the right hon. leader of the opposition does not challenge the principle of Bill 51 and it anticipates the committee stage.
And then Mr. Speaker at a later point closed his ruling with these words:
The objections raised in the proposed amendment cannot be looked upon as reasons why Bill 51 should not now be proceeded with and, moreover, they may be considered after the bill has been read a second time.
Under our established practice the matters which the hon. member for Cape Breton

South wishes considered not only can but must be considered after the bill has been read the second time.
I should like to admit that there are in Beauchesne several citations which would indicate that a motion of this sort is entirely in order. But I would point out that those citations are not, any of them, to be found in that chapter or section of the book which deals with private bills, for which an entirely different practice is set out and has been established.
As to this may I read, with respect, from page 235 of the Journals of last year in which Mr. Speaker said:
Private bills are of a different nature from public bills. I have said that previously in the house. The principle of a private bill is approved conditionally on second reading, subject to confirmation upon satisfactory proof when the bill is before the committee.
As the Prime Minister has so well pointed out, standing order 104 makes it obligatory to refer a private bill, once it has received second reading, to one of the standing committees.
I submit that as to the practice there can be no question. There remains only the incident brought to the attention of the house by the hon. member for Winnipeg North Centre (Mr. Knowles) who said, with perfect truth, that a motion in exactly the same terms as this, on a private bill in 1948, was submitted to the house and was voted upon. The record of this is to be found at page 2831 of Hansard for 1948. What actually occurred was that the hon. member moved his amendment and sat down, and Mr. Speaker took the vote. No question was raised as to whether or not the amendment was in order. Then are we bound by something which occurred in the house when no ruling was made and no point of order was raised? I think that was answered by the decision of Mr. Speaker, from which I quote briefly as it appears at page 215 of the Journals for 1950, where it says:
One must give the member for Winnipeg North, Centre (Mr. Knowles) full credit for finding an instance in 1891 when two such motions without intermediate proceedings were allowed. I repeat, however, that the Speaker did not make a ruling.
That is the end of the quotation. Therefore Mr. Speaker felt that he was not bound.
It would be unthinkable that we should be bound by the incident of 1948. An irregularity, even with the greatest vigilance, may easily slip through and occur once in the proceedings of this house, without a point of order being raised. I do not think it should be suggested that that would establish a precedent which would have the effect of overruling the standing orders and established practice of the house, as it has been over the years. I submit that the amendment is completely out of order on a private bill.
1,	1951	2581
British Columbia Telephone Company


Stanley Howard Knowles: Mr. Speaker, I have listened with particular interest to the comments of the hon. member for Skeena (Mr. Apple-whaite). It is a matter of interest to me when someone does some research into a point of order.
The hon. member has drawn to your attention the fact that there is a precedent in 1948 when an amendment similar to the one now before the house was moved and voted upon. He sought to make a point out of the fact that no argument was raised against the propriety of the motion. Nevertheless the fact is that it was not challenged and it is on the record as a precedent; and I should like to point out to you, Mr. Speaker, as well as to the hon. member for Skeena, another precedent.
This time I go back to 1944; and I ask you and the hon. member for Skeena to pay particular attention to the circumstances in 1944. On that occasion there was before the house a private bill moved by the hon. member for Lethbridge (Mr. Blackmore). This was a bill which sought to incorporate an Alberta provincial bank. On that occasion a similar amendment was moved. Who moved it? It was not a member of the opposition; it was the Right Hon. J. L. Ilsley, who was then minister of finance. His amendment was in precisely the same terms as the amendment now being discussed, namely that the bill of the hon. member for Lethbridge be not then read a second time but that the subject matter thereof be referred to one of the standing committees of the house. Not only was the amendment accepted and voted upon, but it carried. The bill was not then read a second time, but instead the subject matter thereof was referred to the committee mentioned in the amendment.


Mr. Pouliot:: Does not the hon. member recall that at that time, in 1944, the only rule was the will of the government?


Mr. Fulton:: Is that different from what it is today?


Jean-François Pouliot: No, but I am speaking of 1944. You were not here then, but I was. You did not suffer from it, but I did.


Edmund Davie Fulton: I suffer from it now.


Jean-François Pouliot: Amen.


Stanley Howard Knowles: I should like also to deal with other matters which have been raised by the hon. member for Skeena. I mention in particular citation 769, only part of which he read. I would draw his attention to the fact that he did not read the whole of it, but that he left out two significant sentences.


Edward Turney Applewhaite: I put them on the record.
2582	HOUSE OF
British Columbia Telephone Company


Stanley Howard Knowles: The hon. member may have put them on the record some weeks ago when he spoke on second reading, but he did not put them on the record tonight when he was trying to make the point that second reading should not be interfered with in this way. Perhaps I should read those two sentences now.


Some hon. Members:: Nine o'clock.


Stanley Howard Knowles: It says:
Where, irrespective of such facts, the principle is objectionable, the house will not consent to the second reading; but otherwise, the expediency of the measure is usually left for the consideration of the committee. This is the first occasion on which the bill is before the house otherwise than pro forma or in connection with the standing orders; and if the bill be opposed, upon its principle, it is the proper time for attempting its defeat.
My point is that right there in that section in Beauchesne which deals with private bills-and my hon. friend from Skeena makes a great deal of the fact that there is a special section dealing with private bills- right there in that section is the admission that even a private bill, which often gets a perfunctory second reading, can be dealt with in a manner designed to defeat it if hon. members so wish. I should like to deal with one other point raised by the hon. member-


Some hon. Members:: Nine o'clock.


Stanley Howard Knowles: -but I see it is nine o'clock. I would move the adjournment of the point of order.


Mr. Speaker:: If the house prefers, I would be prepared to make my ruling.


Some hon. Members:: Hear, hear.


Mr. Speaker:: First of all I should like to
commend both hon. members for the manner in which they carried on this debate, and for the research they have made into this very interesting point of order. Although I am making my ruling now, I intend to give this matter further consideration, should a similar amendment be made in future.
In view of the two amendments which have been brought to my attention by the hon. member for Winnipeg North Centre, it would be hardly fair to disallow this amendment without notice. I will not say there has been a practice established, but in two cases this amendment has been allowed to stand. Therefore I am going to allow this amendment to stand. May I also say I feel that when this amendment is debated the whole principle of the second reading of the bill should not be debated but that the debate should be strictly confined to the amendment.
May I refer for a minute to the previous ruling which I made with respect to the


standing of private bills when the sponsor is not present. I said at that time that I thought there might be an amendment to the procedure. I was referring to the fact that when hon. members come to the house for private members' hour they do not know what bills are to be debated. I think it would be helpful if hon. members knew in advance what bills were going to be considered during that hour. This would be similar to the practice in connection with government business.
It being nine o'clock, the house will resume the business interrupted at six o'clock.



[Stage Direction]
The house in committee of ways and means, Mr. Beaudoin in the chair.

[Stage Direction]
Resolved, that it is expedient to introduce a measure to amend the Excise Tax Act and to provide:
1.	That the rate of the general sales tax be increased from eight to ten per cent and that the rate of sales tax on those articles at present subject to four per cent be increased to five per cent.
2.	That the excise tax on goods mentioned in schedule I of the act, and on furs, that are at present subject to the rate of fifteen per cent be increased to twenty-five per cent.
3.	That the excise tax on candy, chocolate, chewing gum and confectionery that may be classed as candy or a substitute for candy, be reduced from thirty to fifteen per cent.
4.	That there be imposed, levied and collected an excise tax of fifteen per cent on the following goods when adapted to household or apartment use:
(a)	stoves, hot plates, grills and other appliances when adapted wholly or in part for cooking and when designed for using other than solid fuels;
(b)	washing machines operated by electric or other power;
(c)	electric, gas or kerosene refrigerators and freezing equipment and complete parts therefor including coils, condensing or compressor units, motors, cabinets, boxes, evaporators and expansion valves.
5.	That the excise tax on cigarette papers and cigarette paper tubes be repealed.
6.	That the excise tax on the following goods be increased by the amounts shown;
(a)	for each five cigarettes or fraction of five cigarettes contained in any package, three-quarters of one cent;
(b)	for each ounce or fraction of an ounce of manufactured tobacco, including snuff but not including cigars and cigarettes, contained in any package, three cents;
(c)	for each ounce or fraction of an ounce of Canadian raw leaf tobacco when sold for consumption in Canada, three-quarters of one cent.
7.	That the sales tax on the following goods be repealed;
(a)	cortisone;
(b)	adrenocorticotrophin (ACTH).
8.	That any enactment founded upon this resolution be deemed to have come into force on the eleventh day of April, nineteen hundred and fifty-one.
Mr. Fleming:: Mr. Chairman, in view of the fact that, following the discussions and rulings of last Thursday, the discussion now is ranging broadly over the eight sections of the resolution, may I direct a question to the parliamentary assistant with reference to item No. 3, the proposed reduction in the excise tax on candy, chocolate, chewing gum and confectionery from 30 per cent to 15 per cent. The reasons for this proposed reduction have been indicated by the Minister of Finance in his budget speech. It strikes me if these reasons are valid, and I have no reason to think they are not, that the proper course for the government to have followed would have been not simply to propose a reduction in the tax but repeal of the tax. I ask the parliamentary assistant, therefore, particularly in the light of the statement made by the Minister of Finance in his budget speech of April 10, what justification there can be for continuing this tax even at the 15 per cent rate?


Jean-François Pouliot: Before the parliamentary
assistant answers, may I suggest to the hon. member for Eglinton that he should visit the plants of manufacturers of candy and chocolate. He would be surprised to see the number of machines that were idle on account of the heavier tax. I took the trouble to visit a big plant in Montreal. I will give the name to my hon. friend if he wants it. I was surprised to see the number of machines that they had to make and wrap chocolate bars. The only thing that was done by hand was the putting of chocolate drops into the boxes. It is a huge plant that has to be enlarged, and I was surprised at the number of machines that were idle. I asked about the personnel, and they told me that the number of personnel was one-quarter of what is was in August of last year. They said that in August of last year they had 600 people working there, and the number had fallen to 200. This was before Easter, the busy season for candy manufacturers.
I had a letter from a candy manufacturer in my constituency who told me that he would have to close his business if the tax was maintained at 30 per cent. The same thing was said by many other candy and chocolate manufacturers, and I am sure that the minister had representations from all over the country to the same effect. When I was in Toronto I would have liked to visit the Neilson plant, but I did not have the time to do so because we were so busy seeing interesting things. I would have made a point to go there and ask them if conditions were the same in their plant as they were in the plant of the Montreal candy manufacturers. When hundreds of people are put out 80709-165
Excise Tax Act
of work precisely on account of the increase in the tax, I find it judicious of the government to decrease the tax in order to give more employment to people.
My hon. friend knows what quantities of chocolate bars are sold to children, and not only to children but to people who travel and eat them on trains, and to people who eat them at picnics, and so on. The consumption is very large in Canada. It is true that they are a good food but that is not my point. What I wanted to tell my hon. friend, and what I want the hon. gentleman to understand, is that it is not a matter of producing more candy. It is not so much that as the idea of keeping people at work who are accustomed to doing that type of work, women who cannot do hard work. Moreover, if my hon. friend takes the time to go to Neilson's in Toronto, a firm that I have not visited, and others in other cities of Canada, he will be surprised to see the machines they use for the manufacture of chocolates and other candy, and I am sure he will appreciate the fact that the tax has been reduced as much as possible in order to provide more work for both men and women.


Donald Methuen Fleming: May I remind the committee that a similar tax was in effect until the spring of 1949. The pre-election budget was distinguished among other things by the entire repeal of this same tax. The repeal lasted only until September, 1950, when the Minister of Finance, even in the face of the reasons which he had given in the spring of 1949 for repeal of this tax, asked the house to reimpose the tax and to levy it at the rate of 30 per cent. In his budget speech on April 10 the minister said, as reported at page 1812 of Hansard:
In September a tax of 30 per cent was imposed on all candy, confectionery and chewing gum. Experience has shown that this rate has been too severe, and its effects upon the industry have been out of proportion in comparison with other taxed industries. We propose, therefore, to reduce this rate to 15 per cent.
In that brief reference, Mr. Chairman, I think the minister has shown quite conclusively what were the inherent defects of this tax. First of all, it was discriminatory. It singled! out the manufacturers of a particular article or articles, which in the eyes of most people are a food', for a special tax. As the hon. member for Temiscouata has pointed out, in that respect it was discriminatory against the persons employed by the companies producing these goods as well as against those who were employers and industrialists. In the second place, the minister has pointed out that the tax had a damaging effect on the industry. He drew attention to the fact that the effects on the

Excise Tax Act
industry have been out of all proportion in comparison with other taxed industries. The amount realized from this type of tax, which of course in large measure is paid by youngsters and the parents of youngsters, has been out of all proportion to the damage which has been done to the industry and consumers.
I come back to the question I put to the parliamentary assistant. If the Minister of Finance has given sound reasons for the proposed reduction in the tax, it seems he has given equally sound reasons for its complete repeal, and I ask what justification there can be for continuing to tax even at the rate of 15 per cent.


Angus MacInnis: This is the first time I have taken part in any of the discussions concerning the budget, but I feel I must say something in opposition to the increase in the sales tax. In his budget speech the minister said, in mentioning this increase-I am not quoting his words but giving their sense or import- that as 95 per cent of the food items were exempt from the sales tax, for that reason this tax would not fall heavily on those in the low income brackets. That seems to me terribly callous reasoning. Surely people whose incomes are already so low that the greater part must be spent on food are sufficiently punished even if they go free of all taxes.
Then on Thursday evening, I think it was, the parliamentary assistant referred to the fact that the number of persons gainfully employed in this country was 5,200,000, but of that number only 2,200,000 paid income tax. I do not know whether he said in effect that the reason for this increase in the sales tax was to catch the other 3,000,000 so that they would contribute to paying for some of the social services they enjoy. Let us examine that reasoning. If the reasoning of the Minister of Finance was callous this is equally callous, if not more so. The exemptions under the Income Tax Act are $1,000 for a single person and $2,000 for a married person.


James Sinclair: On a point of order, Mr. Chairman, when I tried to expand this argument myself the whip of the C.C.F. was promptly on his feet to call me out of order because the income tax resolution was not being discussed. I suggest in all fairness that the rule be applied to the colleague of the hon. member for Winnipeg North Centre as it was applied to me.


Angus MacInnis: Before you give your ruling, Mr. Chairman, may I point out the difference between what I am saying now and what the parliamentary assistant said Thursday evening.


James Sinclair: I never had a chance to say it.


Angus MacInnis: 
Mr. Stuart (Charlotte):: I should like to
say a few words in reply to the suggestions that have been put forward by the member for Temiscouata. I want to congratulate the Minister of Finance and the government on the reduction in excise tax on candy. This adversely affected a large industry in my riding, the manufacturers of Ganong's chocolates. I believe this measure is appreciated by all who work for them, and by the officials of the company. At the time this thirty per cent tax was imposed, I was advised that the greatest competition Canadian candy manufacturers had was from the importation of chocolates from Great Britain. Apparently the chocolate that was manufactured was made from cocoa that had been subsidized by the government and sugar 80709-1654
Excise Tax Act
that had been subsidized by the government. Competition of that kind was very unfair. Companies in Great Britain that had subsidiaries in Canada were able to ship chocolate into this country duty free because the dumping duty was not applied. It was a very unfair thing to the candy manufacturers of this country. I do know that Ganong Brothers were obliged to discharge several men and women who were working for them at the time this tax was applied.
It has been suggested that the tax should be applied also to what we sometimes term nickel articles such as ice cream and potato chips. Today when a child goes into a grocery store or a drug store with a nickel, there are very few things he can buy. He can buy ice cream and potato chips. If one looks back over the record, one finds that the sale of potato chips increased one hundred per cent within a few months after this tax was applied. The candy manufacturers considered this to be very unfair.
I do not want to take any more of the time of the committee, but I do want to congratulate the minister and the government on taking this matter into consideration because the candy manufacturers were at a great disadvantage. I might point out that the cost to Ganong Brothers was considerable. They had 30,000 boxes of eight-cent bars which were selling for eight cents and which had to be sold at a loss of 48 cents a box. The production of the bar department was down from 120,000 pounds per month to
65,000	pounds per month for the first three months after this tax was applied. The production of penny goods ceased completely, and with Ganong Brothers that was a very big seller. This tax prohibited the manufacture of that type of candy. There were over 17,000 boxes of labels that had to be discarded owing to the fact that the size of the bar had to be changed, and those wrappers were a total loss. It is estimated that the tax cost Ganong Brothers in the vicinity of $60,000, and their production was down about one-third. I believe the reduction in the tax was a move in the right direction, and I want to congratulate the minister on the consideration he has shown that industry.


Frederick Davis Shaw: There are a few questions which I should like to direct to the parliamentary assistant to the Minister of Finance. These questions arise out of a statement the minister made when delivering his budget on April 10 which is to be found on page 1812 of Hansard. He was speaking of the reason for increasing the sales tax, and he said:
My range of choice to secure this remaining $100 million is really limited to more than doubling the

Excise Tax Act
increase I have already proposed on the personal income tax, which could only be achieved by a sharp lowering of exemption levels, or an increase in the sales tax.
Now, I am asking the parliamentary assistant if we are to take that just as it reads. Was the Minister of Finance actually limited to a choice as between those two things, and if so would the parliamentary assistant list those factors which limited the minister's choice either to the raising of the sales tax or an increase in the income tax rate?


Mr. Follwell:: Mr. Chairman, I should like to ask-


Frederick Davis Shaw: Mr. Chairman, I did not ask my question just to be passing time. The minister asserted he was limited to a choice of either imposing an additional 25 per cent sales tax or increasing the income tax rate. Are we to take that as it reads? If so, will the parliamentary assistant list those factors which limited the minister to a choice between those two things? After all, a budget speech is not delivered extemporaneously. It is a carefully prepared document, and I assume it is carefully thought out. Every word is weighed, and I take it as it reads.


James Sinclair: Mr.	Chairman,	hon.
.'members who listened to this debate -win understand	why I perhaps have
-not paid too much attention to what the hon. member for Red Deer has said. Earlier in the debate he made the observation that he believed the budget had been thrown together overnight. Now he says: Of course I know the budget had very grave and long [DOT] consideration given to it. Then he says an extraordinary thing, and asks me as parliamentary assistant to the Minister of Finance whether the minister really meant what he said when he said that for reasons which he had already outlined he was limited in raising this last $100 million either to an increase in the sales tax or a still further increase in the income tax. Anyone who studies his analysis of the revenue which we can expect from each of the increases in the major fields of taxation would see the great extent to which such an increase would have to be made to raise a further $100 million.


Frederick Davis Shaw: If applied to one particular thing.


James Sinclair: For example, $125 million is the figure which we are raising by the increase in tax. When the amendment to one of the clauses was before the committee a little earlier, I pointed out, just by a quick examination of the figures put on record by the minister, that this would have necessitated the substitution of an increased liquor

tax, which is already a very high one, from $12 a gallon to $36 a gallon, assuming that there was absolutely no diminution in the rate of consumption. It is considerations like that which the minister has detailed in the speech itself, as he examines the revenue he can raise from each of the major fields, which led him to that conclusion. If the minister with his logic cannot persuade the hon. member of the correctness of his case, certainly he cannot expect me to do so. As to the hon. member for Eglinton-


Frederick Davis Shaw: May I just make one observation before the parliamentary assistant leaves his reference to me?


James Sinclair: I should prefer to go through and finish.


Frederick Davis Shaw: That is fine.


James Sinclair: Mr. Chairman, I waited until several members had made their points, which I noted. The hon. member for Red Deer insisted that I get to my feet. Now that I have risen, I think that I should at least be allowed to finish my remarks and deal with the other points.


Frederick Davis Shaw: I can make my observations later.


James Sinclair: The hon. member for Eglinton referred to the tax on candy. Since we had found that this taxation on candy was too heavy in relation to taxation in competing fields, he asks why we did not remove it completely. Of course, I cannot quite follow his logic. Because the tax is too heavy, that does not imply immediately that the whole tax should be removed. We have reduced it to 15 per cent. We have cut it in half. The candy and chocolate manufacturers naturally would be happy-as would any other manufacturer-to see all taxes on their product totally removed. But as the hon. member for Charlotte has pointed out, their feeling is that this action would put them in a position where they can again compete.
The points put forward by the hon. member for Vancouver East, of course, have been put forward by practically every other opposition member who spoke. The point made by the hon. member for Red Deer this afternoon, to the effect that people in opposition talk differently about the sales tax from people in government, is of course amply borne out by the records which have already been presented in this house. When the Conservatives increased the sales tax 500 per cent, from one per cent to six per cent, of course the Liberals were indignant. Now the Conservatives are equally indignant because, as a result of defence revenue needs, we have been forced to increase it 25 per

cent, from eight per cent to ten per cent. The hon. member for Vancouver East of course will recall that the C.C.F. in power feel differently about the sales tax from the C.C.F. not in power, because in Saskatchewan, I understand, despite the promises to remove the sales tax when they were in opposition, the sales tax has been increased by the C.C.F. government from two per cent to three per cent, which is a 50 per cent increase.


Major James William Coldwell: But they removed it from a long list of the necessities of life-from foods, meals, drugs and a long list of other things. As far as the C.C.F. here are concerned, may I say that we have not changed our opinion.


James Sinclair: Of course not. That is the whole point of the little argument I am making. When they are in opposition, of course it is an iniquitous tax. I am amazed that the leader of the C.C.F. should have so little influence on the provincial government in Saskatchewan.


Major James William Coldwell: I have no more to do with the provincial government in Saskatchewan than has the Prime Minister to do with the provincial government, we will say, of Nova Scotia or of Quebec.


James Sinclair: I should think it was important that the one socialist government in Canada would be a model government, and that the leader of the C.C.F. group would take more than a paternal interest in what they were doing.
As to the list of exemptions, our list of exemptions to the sales tax is a far wider one than any provincial list of exemptions in any of the provinces which apply the sales tax.
Since you, Mr. Chairman, permitted the hon. member for Vancouver East to extend his argument on the income tax, may I say that the point I made, by raising the fact that out of 5,200,000 people gainfully employed in Canada only 2,200,000 paid income tax last year, was in order to point out with the tables that in Canada we give the highest income tax exemptions of any country of the western world. It is not that our incomes are too low, but rather that we have seen to it that our income tax exemptions are the highest of any in the western world. When I get to the income tax resolution, I will certainly put on the record the income tax exemptions of other countries and the actual taxes paid by a Canadian earning $3,000 a year.


The Deputy Chairman:: Order. I heard the parliamentary assistant state that I permitted the hon. member for Vancouver East to speak
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about the income tax. I did not permit him to do so. He did so because he was in order when he was doing it. He was drawing a parallel or citing an example.


James Sinclair: I am sorry, Mr. Chairman, if I used the word "permit". In any case, like the hon. member for Vancouver East, I have now finished that avenue.
One other point raised as to the tax on candies was that it was not only the tax on candy but the large increase in the cost of raw cocoa beans which has also affected our Canadian chocolate manufacturers. That situation of course was mentioned by the hon. member for Charlotte. The other evening the hon. member for St. John's West asked me about the customs tariffs on these various items. I have that information with me tonight and when we are on the customs tariff bill I will give it to him.


Major James William Coldwell: May I just ask one question here? Is it not a fact that imported chocolates also pay the excise tax; that is, they pay the customs tariff and the excise tax?


James Sinclair: That is quite true.


Major James William Coldwell: I understood the hon. member for Charlotte to say that it was unfair competition from the British chocolate candy manufacturers about which they were complaining. Perhaps I misunderstood him.


James Sinclair: No. The hon. member's point was that the chocolate manufacturers in Britain can buy their cocoa beans at a better price than can our Canadian manufacturer. The source of cocoa beans is the Gold Coast of west Africa; and cocoa is subsidized in Britain.


Frederick Davis Shaw: May I pursue this matter, Mr. Chairman? The parliamentary assistant's answer to my question was interesting but not very convincing.


Ernest George Hansell: It was not an answer at all.


Frederick Davis Shaw: One could hardly construe it as an answer. When on a previous occasion I referred to my conviction that the budget had been thrown together in a hurry, I was making specific reference to the specific proposals contained in it. But I assumed at least that the minister would be extremely careful with regard to the use of words in trying to deal with a set of proposals which must have been a bit unwholesome even to him in his way of thinking. In the second place, Mr. Chairman, it is obvious that the parliamentary assistant undertook to convey the impression that I was suggesting that if he had not acquired $100 million from an increase in the sales tax, he would have had

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to procure it from additional taxes on one other commodity, and he mentioned liquor. I suggested earlier in the debate that I was convinced that the minister was not limited to liquor. In fact, I made one or two other suggestions. I would say there are a great many fields open. The effect of my question was to question the propriety of indicating to this house that he was limited to a choice of one of two things. Personally, I am convinced that he was limited to no such field at all. As I see it, I think it was a mere attempt to find an additional argument, if possible, for doing something which the minister knew would be most unpopular with the Canadian people.
I just wish to make one other reference. The parliamentary assistant referred to an observation of mine this afternoon with regard to a Liberal member acting one way when he is a member of the opposition and acting in quite another way when he is a member of the government. I had in mind this: In the late spring and early summer of 1935 when the Liberals were asserting to all who would listen that they were certain to form the next government, they were also damning the sales tax. Yet, when they brought down their first budget on May 1, 1936, one of the first things they did was to increase the sales tax from 6 per cent to 8 per cent, and estimate that they would draw from the pockets of the people $23 million additional tax by that process. It seems rather strange to me that such things could all occur within the space of less than a year.	The sales taxes were vicious in
principle in the late spring of 1935 and during the summer, and particularly during the election campaign of the fall of 1935. It is an amazing thing that it took on such favourable characteristics almost immediately after the Liberals were elected to office, and more particularly when the minister of finance of that date was drafting his budget. But I do not intend to say anything more, Mr. Chairman, except to reassert that I should have liked to get a list of those factors which limited the minister in his choice between increasing the income tax on the one hand, and imposing a sales tax on the other; but obviously I shall not get a more specific answer tonight, and therefore I will let it ride at that.


Mr. Harkness:: I should like to bring up the matter of sales tax on school busses. I know that the Minister of Finance has received representations from the Alberta school trustees association, and I think from a large number of other school associations in connection with the sales tax, requesting that it be removed so far as busses and other

vehicles used solely for the purpose of transporting pupils to and from schools are concerned.
We have in this house a considerable number of debates in connection with federal aid to education. Nothing has been done along that line. This is one of the ways in which the federal government could give a certain amount of aid to education without hurting themselves to any extent. It seems an unreasonable thing that the school districts and municipal areas throughout the province should be burdened when they are attempting to raise the money to finance schools; and as for the busses they purchase for that purpose, or busses used for that purpose in the school district-they have to pay it eventually whether they actually own the busses or somebody else does-it seems quite ridiculous that these municipal areas should have to pay the sales tax on busses used for this purpose or other vehicles used solely for this purpose.
Last year I brought this same matter up, and the minister promised to give consideration to it in the following year's budget-that is, the present budget we are considering. Apparently nothing has been included. Why has the sales tax on these school busses not been done away with? Is the parliamentary assistant going to answer?


James Sinclair: I have been answering
questions in batches for three or four members at a time. I did that to save time, but if hon. members want me to answer them individually, all right.


Douglas Scott Harkness: Then I have another
question that I also submitted to the Minister of Finance some time ago. It is in connection *with the sales tax on gasoline-powered vehicles, trucks and so forth, which are used exclusively in the production of coal. There is an anomalous situation in this connection. Any truck, or other vehicle, which is a diesel-powered vehicle and used exclusively in the production of coal does not bear sales tax; but if the motor in the truck-it might be exactly the same truck-is a gasoline-powered motor it is subject to sales tax. It does exactly the same work, and the request that was made to the minister in this connection was that gasoline-powered vehicles used exclusively in the production of coal, chiefly in stripping operations-there are some vehicles also used in mines-be not subject to the sales tax. I have in front of me a letter from the minister in which he says: "I shall be very pleased to consider this request when I am reviewing the sales tax proposals during preparation of the budget." Well, apparently he was pleased

to consider it, but there does not seem to have been any action. Why has that change in the sales tax set-up not been made? The amount of money which would be lost to the federal government as a result of repealing this tax would be very small. The number of these vehicles used is not great, but so far as the people in the business are concerned it is quite an important item. In view of the fact that this concession was made so far as diesel-powered trucks are concerned, I can really see no reason, no sense from any point of view, why gasoline-powered trucks should not be put in the same position.


Frank Sidney Follwell: May I also take this
opportunity of saying thank you to the department and the minister for reducing the tax from 30 per cent to 15 per cent on candy goods. I should like to bring to the attention of this committee something that was happening in my riding to a small firm that was attempting to carry on business, and the way in which this 30 per cent tax adversely affected not only the business but the income of the government as well. To that end I shall quote from a letter received from the Tweed chamber of commerce:
At a recent meeting of Tweed chamber of commerce, it was disclosed that the 30 per cent excise tax, recently imposed by the dominion government on certain types of confections, has resulted in a serious blow to one of Tweed's leading industries, the W. T. Hawkins Company, Limited.
They are manufacturers of caramel-coated' popcorn, which is now affected by the tax. Since the tax was imposed, employees are only working part time and as a result a great deal less money from the company's payroll is in circulation in the village.
If the purpose of the government was toward increased revenues, it is quite clear that the tax has had the exact opposite effect in the case of the Hawkins company, where production has been reduced by 75 per cent.
Tweed chamber of commerce looks on the tax as a serious threat to business among the merchants in our community. We would greatly appreciate it if you would kindly bring to the attention of the government the damaging effect that the tax has had on business in this little town.
Well, Mr. Chairman, I should like to go further and show by a comparison the effect that this 30 per cent tax has had not only on the business of this company but on the income of the government as well. The average monthly sales for twelve months ended October 30, 1950, before the tax was put on was $22,359. After the tax was imposed the average monthly sales for five months ended February 28, 1951, was $5,724. The average monthly sales tax for twelve months ended September 30, 1950, was $1,788. The average monthly taxes, sales tax and) excise tax, for five months ended February 28, 1951, were $2,190. During that time the cost of
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ingredients and packing materials of course increased as well. This company was faced not only with declining sales but increased cost. The ingredients such as corn increased from October, 1949, to February, 1951, 19-8 per cent; sugar increased in the same period 19-1 per cent; corn syrup, 14-8 per cent; cellophane bags for packing, 17-4 per cent; display boxes, 28-2 per cent and' cases for packing, 14-5 per cent.
This product is one known as Caramel Corn Snacks, and I submit the government should consider that this com should be treated in the same way as other popcorn, should be declared outside the act and be made tax free.
On a resume of the net sales I would point out the figures from July 1950 to February' 1951. In July of 1950 the net sales amounted to $22,555.77, while the total sales and excise taxes amounted to $1,804.07. In August of that year the net sales amounted to $19,508.24, while the total sales and excise taxes amounted to $1,560.66. In September, the net sales amounted to $14,903.68, while the income to the government from sales and excise taxes amounted to $4,374.63. Then when the 30 per cent tax went on, in October the sales dropped to $5,247.66, and the income to the government in sales and excise taxes amounted to $1,994.11. In November the net sales was valued at $9,864.77, whereas the total sales and excise taxes amounted to $3,748.61. In November sales were higher, owing to the sale of a new 25-cent package, in the hope that it would stem the falling off of business. However, most of those 25cent packages are still in the hands of distributors, and' unsold at the present time. In December net sales amounted to $5,019.82, and total sales and' excise taxes to $1,907.54. Then, in January of 1951, net sales were valued at $5,539.33 whereas total sales and excise taxes amounted to $2,104.95. In February, total sales amounted in $3,148.60 whereas total sales and excise taxes amounted to $1,196.47. Once again I would impress upon the government the fact that this product is similar to that now being marketed as a candy cereal, on which there is no tax. It is in direct competition with popcorn, which, as I have said, apparently is outside the act and is not subject to tax.
I would ask the parliamentary assistant to take the matter into consideration and to pass on to his minister the request that this caramel product, known as Snacks, be placed on a basis comparable with popcorn, and thus be declared tax free.


Howard Charles Green: I should like to ask two questions, the first of which has to do with the

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application of the sales tax on motor cars. Representations have been made to me respecting a person who had paid for his car in Vancouver, and was to take delivery at the factory in the east. He was to pick up his car on April 18. Meantime the tax was announced, and he has been charged the increased percentage.
My second question has to do with a new drug known as Chloromycetin, which apparently is subject to the sales tax at the present time. This drug is very expensive, twenty pills costing about $16. I believe it falls into the category of a necessity in connection with the treatment of a certain type of ailment. The parliamentary assistant knows that in many cases people who require these drugs have already suffered greatly from sickness, and are in poor financial circumstances. Is there any possibility of having this drug included among the exceptions? If it were so included the amount of tax lost would be negligible, and I believe a genuine case has been made for those who must use it. The person who wrote to me had to take one of these pills every four hours for at least three days. The parliamentary assistant will see that at a price of $16 for twenty pills this runs into heavy expense. Could this drug be included among those already mentioned in the resolution?


James Sinclair: The hon, member for Calgary East asked why the sales tax had not been removed from school busses. Two years ago we removed the excise tax from such busses, and at that time the move was naturally welcomed. School busses in this country fall into two categories. The great bulk of them are not owned by school boards, but are owned rather by men in the transportation business. In my own riding, for example, the busses are privately owned and used for other purposes during the day. The difficulty of establishing a hard and clear line between a bus company which pays not only the sales tax but also the 25 per cent excise tax, and which has not a school bus franchise, and those who have a school bus franchise, would make it a very difficult problem of administration. We have given relief to the extent that school busses do not pay the excise tax on motor cars.
The second point raised by the hon. member was as to why we still levy the sales tax on gasoline-powered equipment used by mines or quarries for off-road work. The exemption of diesel-powered equipment is fairly recent. The mining industry welcomed it as a great step forward. Diesel equipment is, of course, larger, more expensive and heavier than gasoline-powered equipment.
It has far less other uses. Most gasoline-powered equipment can be converted quickly to other uses, and in this respect is unlike the diesel-powered equipment. If hon. members will look at the customs tariff schedule they will see that we are again widening very greatly the tariff concessions on mining equipment.
I might add that this distinction between diesel-powered and gasoline-powered equipment is not confined to mining and quarrying. In the same customs tariff amendments it will be found that we exempt diesels used by fishermen, whereas gasoline-powered equipment used by fishermen is still subject to the tariff.
Then the hon. member for Hastings South raised the point he had already raised with the department with respect to the tax on candy-coated popcorn. Once again this raises the problem as to where the borderline in taxation must go. In his mind he can build up good reason as to why this product should be subject only to the tax applicable to nuts and popcorn. Of course the candy people would be the first to complain by saying that here is a candy-coated confection free from tax being sold in competition with candy which is paying 15 per cent. They would ask that since this confection is candy-coated it should be classed as a candy.
The actual budget resolution refers to candy, chocolate, chewing gum and confec- ' tionery that may be classed as candy or a substitute for candy. I know that the average small child who buys candy-coated popcorn feels that he or she is buying candy, not popcorn. For that reason they are included in that category, and I feel sure that the remission of the excise tax from 30 per cent to 15 per cent will be helpful to the firm the hon. member has mentioned.
The hon. member for Vancouver-Quadra has raised the matter as to when the sales tax on cars applies. It has been the ruling of the Department of National Revenue that the sales tax applies on delivery from the manufacturer. Some sales dealers do sell cars ahead of time on contract, that they will sell the car at a certain price, no matter what tax change may take place. In that case the dealer must pay the increased tax, if any.
Then, so far as the special drug the hon. member mentioned is concerned, my answer would be that we have to be pretty well guided by the regulations of the Department of National Health and Welfare. The question of taxation of drugs is a different one because there are many drugs, some very expensive and some cheap, some which of course are
:Wr. Green.]

well known and very useful and others concerning which doctors have doubts as to their effectiveness despite the enthusiasm with which individuals may use them. If this drug has a widespread use and is as expensive as it is said to be, I have no doubt that the Department of National Health and Welfare will make representations to the department to include it, perhaps not this time but for next year's budget, with the class of drugs under doctors' prescriptions which we now exempt from sales tax.


Donald Methuen Fleming: Mr. Chairman, I think the parliamentary assistant rather sought to brush aside what had been said with respect to the inadequacy of the reduction in the tax on candy, chocolate and confectionery. I think the point is not to be so easily avoided, that the Minister of Finance himself has in effect destroyed by his argument any basis in logic for continuing this tax even at the reduced rate. Bear in mind, sir, that this form of product bears a sales tax. What we are dealing with here is an excise tax in addition to the general sales tax which itself is going to be increased by the present budget. Let us not overlook that.
When hon. Liberal members, two of whom have spoken tonight, commend the Minister of Finance for reducing the excise tax on candy, chocolate and confectionery, let us bear in mind at the same time that the increase in the sales tax on the same commodities is going to have the effect of largely neutralizing this inadequate reduction in the excise tax. I am sure I do not need to spend any time in answering the argument that no reduction is required because two government supporters in the house tonight have already given a rather graphic picture of the very harmful effects experienced by the manufacturers of these commodities and their employees as a result of the very drastic excise tax of 30 per cent that was applied last September on those commodities.
I happen to have some figures here indicating the increased costs which have confronted the manufacturers of these commodities. I have the figures of the cost of their raw materials in 1939 and alongside them the figures of the cost of their raw materials in 1950 at the time the minister applied his 30 per cent excise tax. I shall indicate in each case the proportion of increase for each item of raw material that enters into the production of candy, chocolate and confectionery. The first is cocoa beans. The price in 1939 was 7 cents a pound and in 1950 38 cents a pound, an increase of 443 per cent. The price of cocoa butter in 1939 was 14-9 cents a pound, and in 1950 80 cents a pound, an
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increase of 437 per cent. The price of sugar in 1939 was 5 cents a pound, and in 1950 9-66 cents a pound, an increase of 93 per cent. While I am speaking about sugar, let me remind the committee, Mr. Chairman, that a special excise tax is collected on sugar.
The raw material cost of glucose in 1939 was 3'35 cents a pound, and in 1950 7-07 cents a pound, an increase of 111 per cent. The price of milk powder in 1939 was 13-82 cents a pound, and in 1950 28-42 cents a pound, an increase of 105 per cent. Turning for the moment from raw materials to paper and packaging materials of various kinds, the increase in the period from 1939 to 1950 has been variously from 50 per cent to 75 per cent. As to peanuts, which enter into the production of a good deal of confectionery, in 1939 the price was 5 cents a pound, and in 1950 15 cents a pound, an increase of 300 per cent. Then there is also the increase in labour costs which from 1939 to 1950 show an increase of 65 to 100 per cent depending upon the nature of the particular work.
In the face of these heavy increases in the cost of production, this industry, which has suffered seriously under the handicap imposed by the minister in his 30 per -cent tax last fall, is, on the minister's own reasoning as disclosed in the budget speech, entitled to something better than a 15 per cent decrease in the excise tax while at the same time facing an increase from 8 per cent to 10 per cent in the sales tax. Anything that the parliamentary assistant has said on the subject tonight seems to me to fall far short of justifying the inadequacy of this decrease, or in fact any continuance of the excise tax on these commodities at all. So much for the one decrease in taxes offered by the budget.
The rest of the picture is one of increases down the line. As to these increases I wish to make two observations of a general nature. In the first place it seems to me that it is axiomatic in all taxation that taxes ought not to be discriminatory, that they should not favour one group at the expense of another, that they should not penalize manufacturers or producers in one particular line while at the same time benefiting or exempting others in similar lines of production. That has been one of the main grounds of attack on and protest against the impositions in this budget. Let me take your mind back, Mr. Chairman, to last September when the Minister of Finance for no adequate reason chose to select certain commodities as targets for the imposition of what was then a 15 per cent excise tax. There were those who muttered the world "luxuries" under their breath and conjured up memories of the so-called luxury
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tax that was imposed during the war, a tax, let me remind you, which was not imposed at the producer level but was a tax on the consumer. It was a tax levied at the point where the goods left the retailer to enter the hands of the consumer, a tax that was well known, well advertised, and which the people who were paying it had an opportunity to measure. The Minister of Finance in due time sought to replace that tax by a hidden tax, a more favoured form of taxation because it is thought to be easier to extract money out of people when they are not conscious of paying a tax on the commodities they have to buy. But when some were recalling that so-called luxury tax of war days, I do not recall that anyone in the house had the temerity to stand up in his place when this tax was under debate last September and say that the commodities upon which the minister then proposed to apply a 15 per cent excise tax were in fact luxuries. You have only to look at the list to realize that some of these articles are clearly articles in very common use in hundreds of thousands of households in this country. Articles such as toasters, electric kettles, electric irons, vacuum cleaners and so on were singled out for the imposition of this special 15 per cent excise tax. The unrepentant Minister of Finance is not satisfied with having discriminated against those who produce these articles, whether employers or employees, and against those who sell them and those who buy them; he has chosen to increase the tax from 15 per cent to 25 per cent in addition to the sales tax, which has also been increased by 25 per cent. I say to you, Mr. Speaker, that there is no ground whatever for singling out commodities such as those for the application of this discriminatory tax.
Take luggage, for instance. I will concede at once that there are some very expensive types of luggage which in all fairness might well bear their share of necessary taxation, but there is a great deal of luggage that cannot be classified as luxuries by any stretch of the imagination. Therefore there can be no justification for singling out that type of luggage, first of all last September for the imposition of a 15 per cent excise tax, and now for an increase in that tax to 25 per cent accompanied by a 25 per cent increase in the sales tax.
If the minister wants to draw a line between what may be regarded* by most people as luxuries on the one hand and on the other hand those commodities, perhaps of a similar nature but less expensive, which most people would regard as reasonable necessities of life, let him do so; but let him not proceed, as he did last September and as

he is trying to do now, to select articles without making the slightest attempt to distinguish beween those that are luxuries on the one hand and those that are necessities on the other, and include them all in his discriminatory taxes.
It seems to me that in respect to the taxes under debate in this eight-point resolution the minister has offended that first canon of taxation, that there should be no discrimination, that taxation should be fair in its general incidence.
Another rule or canon of taxation I think the minister has woefully transgressed' in this resolution is that when the cost of living is rising rapidly, when the full effects of inflation are bearing oppressively on most of the people, if there must be increased' taxation the taxes imposed should not be such as to increase the inflationary pressures on the one hand or to take away from those upon whom these inflationary pressures are bearing most severely the limited means at their disposal to meet the soaring cost of living. In almost every respect this resolution concerning excise and sales taxes has offended in the most flagrant way that simple and obvious canon, though if ever there was a time when it should be observed it is in this year of inflation 1951.
What do we see? I have pointed out that in the sales tax, which applies to so many of the elementary necessities of life, the minister is imposing a 25 per cent increase. That is the most inflationary form of taxation being used as a fiscal weapon in the hands of the Minister of Finance today. Of all the taxes levied by the government the sales tax is the most inflationary; yet the minister has chosen to increase it by 25 per cent. All of a piece with that design is the increase to which I just referred^ from 15 per cent to 25 per cent, in the excise tax on a list of commodities many of which could not by any stretch of the imagination be regarded as luxuries.
Then, in a third offence against the simple and obvious rule of fair play with respect to taxation in times like these, the minister has chosen to sweep into the category of articles subject to a 15 per cent excise tax a range of commodities including washing machines, refrigerators and other things. These are not only necessities for great numbers of people; actually they enable many families to conserve food and reduce food costs. They have helped* many families reduce the domestic labour of the household, and have permitted more members of the family to engage in gainful employment at a time like this when an increase in the labour force is being

demanded from all sides. No one in touch with the realities of Canadian life could possibly justify increases in the taxes on such commodities as I have mentioned.
The suggestion has emanated) from government benches during the course of this debate that the scrub board is good enough for people in times such as these.


James Sinclair: Who saidi that?


Donald Methuen Fleming: It has been mentioned by several hon. members in the course of the debate. If the parliamentary assistant will refresh his memory from Hansard he will see several references to the subject.


James Sinclair: You said it came from the government benches.


Donald Methuen Fleming: The proposal that commodities such as washing machines and so on should now be treated' as luxuries and subjected: to a 15 per cent tax, if it has any basis in reason or any thinking back of it, must have been prompted by the thought in the minds of hon. gentlemen opposite that the women in this country could do without those things because they are luxuries. If the government wants to split hairs on that they will have their opportunity. I do not think the people in this country will thank any government for suggesting that washing machines are not to be regarded as one of the household necessities of life in this country. Anyone who wants to adtvocate and approve the soaking of the housewife with a 15 per cent excise tax on a washing machine on top of a 25 per cent increase in the sales tax on the same commodity will have an opportunity during this debate to stand1 up and say that he gives his full assent to the shocking proposals that have emanated from the Minister of Finance.
Now, sir, the parliamentary assistant, in connection with the sales tax, and I think this form of reasoning might, if it has anything in it, apply to the excise tax as well, has sought to pass off the attack on this iniquitous increase in the sales tax by saying, "Oh, well, when people are in opposition they ask for a reduction in the sales tax, but when they get into the government they increase it.'' Since the last Conservative government in this country we have seen this government, in the election campaign in 1935 through the then leader of the opposition and the man who was shortly to become prime minister, denounce the sales tax as an iniquitous form of tax, then turn around as soon as it had power and increase the sales tax from six per cent to eight per cent. We are seeing the same mentality bearing further fruit now. But the parliamentary 80709-1661
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assistant in his remarks tonight missed something when he was talking about this and passing it off so lightly as being the sort of thing people object to when they are in opposition but support in increased form when they are in the government. He has overlooked the fact that two very eminent ministers of finance, when they were bearing responsibilities greater than those faced by the Minister of Finance today, in seeking revenues to meet the crisis of war deliberately refrained from increasing the sales tax. It was not a case of their being in opposition when they refused to increase the sales tax. They were in power and they deliberately rejected the temptation to increase the sales tax simply because of the ease with which it can be collected.
Mr. Ilsley, in April, 1941, a very dark time during the war, deliberately rejected any proposal for an increase in that tax, and he did so with these words:
An increase in the sales tax has, I think, been fairly generally expected. At least, there are evidences of a good deal of buying in anticipation of such an increase. This tax, while comparatively easy of administration and collection and extremely productive, has marked defects as a fiscal instrument. After extended consideration, we decided on balance against any increase. In coming to this decision, we were not forgetful of the problems of agriculture, which would have been intensified had the sales tax been raised.
Those are the serious words of Mr. Ilsley in 1941. What would Mr. Ilsley have to say if he were in this house today, faced with the degree of inflation that exists in the country, with the degree of elasticity which has appeared to an increasing extent in the Canadian dollar, the shrivelling of that dollar in the face of mounting costs of the things the housewife has to buy? What would he have had to say about the temptation to increase the sales tax simply because it is productive and easy to collect? Certainly, Mr. Ilsley, faced with a responsibility in 1941 greater than that facing the present minister, rejected all attempts to increase the sales tax.
Then, in February, 1945, the same Mr. Ilsley again deliberately rejected an increase in the sales tax. He referred to the fact that many of these taxes which are imposed far back on the production process increase costs out of proportion to the contributions which they make to the revenue.
In 1940 Mr. Ralston said:
We realize that increases in indirect taxes disguise the burdens imposed by the war but they are much more likely to distribute these burdens harshly and unfairly.
That is exactly what these proposed new taxes are going to do. They are going to distribute the burden of taxation harshly

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and unfairly, and they are going to accelerate the inflationary process. They are going to violate every plain rule that common sense would dictate with respect to the raising of revenue at a time of high inflation.
Finally, sir, on this subject of drugs, I am sure the house will welcome the seventh section in this resolution, which proposes to exempt two drugs from the sales tax, cortisone and ACTH. But, as has been pointed out, why stop there? Why, when the unfairness of imposing a sales tax on these two drugs is recognized by the Minister of Finance, would he continue to impose a sales tax, yes an increased sales tax of twenty-five per cent on the other range of drugs to which sales tax now applies? It seems to me the minister has, by the introduction of this item in the first resolution with respect to excise tax, condemned that act in so far as it either continues the present sales tax or increases the sales tax on another very wide range of drugs. In speaking last week on this resolution the member for Greenwood drew attention to at least one other drug about which I also have received some representations, and about which I know the minister has received representations. It is a drug that is known as prostigmin, and it is a necessity in the treatment of myasthenia gravis. That is just one, and there are many others that leap to the mind of each one of us here. Why should the sales tax, an increased sales tax, be imposed upon drugs which have to be purchased in large quantities by people who are chronic sufferers from diseases for which these drugs are prescribed.
Mr. Chairman, if the Minister of Finance withdrew this entire resolution with respect to the Excise Tax Act except for No. 7, he would be doing his bare minimum duty in the face of the hardships that the balance of the resolution will impose upon the Canadian people. The whole resolution, except No. 7, is shot through with discrimination. It will operate most unfairly on those who are least able to bear these heavy increases in taxation. Mr. Chairman, I urge upon all members of the house that it is our duty to resist this resolution, with the exception of No. 7, to the utter limit and to see to it that sufficient opposition from all parts of the house is mustered against this iniquitous proposal for increasing these heavy impositions that the Minister of Finance will see fit to withdraw this resolution, with the exception of item No. 7.


James Sinclair: I should like to answer this immediately. I, of course, feel that this last speech has gone very far from the purpose of being in committee on the resolutions. When the general budget speech is made, of course members can speak generally on the

principles of the changes which have been announced. It has been my experience in the past that when we go into committee on the resolutions the purpose is to allow members to elicit more information about individual tax changes. Tonight we have heard for about the fourth time the full budget speech of the hon. member, mostly in generalities. He is better when he is indulging in generalities, as I shall show very quickly when I mention the two or three times in which he became specific.
Very early in his speech in connection with the candy tax, he said that we are taking off fifteen per cent excise tax then putting on two per cent sales tax, thus neutralizing the cut. I have a daughter eight years old, and even she knows that if you take fifteen off and put two back on, you are still thirteen to the good. Then he went on to make an even more amazing statement. He said there is still a special excise tax on sugar. As a Conservative, he would remember that there was an excise tax placed on sugar by R. B. Bennett. If there is one subject in recent years on which we have been hearing the hon. member speak at greater length than on this resolution, it is the famous radio budget of 1947. I was under the impression that the hon. member had either heard it or read it, but if he had he would certainly have remembered that on that occasion the Minister of Finance forecast the removal of the excise tax on sugar, which was confirmed the following session.
Then, he went on about discrimination. It was unfair to discriminate against any one industry by special taxation rates. Our whole tax structure since confederation has had varying rates of taxation against various industries. Today, for example, we have a 25 per cent tax on cosmetics. As I pointed out earlier, we have today, jointly with the provinces, an effective rate of about 300 per cent on liquor. Already this session the hon. member's party if not himself-I do not remember whether he was here or not- voted to make this discrimination much more violent, by voting for a motion to add another $125 million to that tax which would have tripled the present rate at least.
He went on at some length with regard to the fact that this whole resolution should be withdrawn, except for the tax relief given for certain drugs. I have listened to him. He wants the sales tax removed, the excise tax of 15 per cent removed, the excise tax of 25 per cent removed. He also wants the excise tax on cigarettes removed. In this house we have heard him urge much bigger personal income tax exemptions which, of course, would lessen our revenue. But I

have never heard him suggest that the corporation tax should be increased. I am confident that when we come to it, we shall also find that he is advocating a reduction in the corporation tax or perhaps the abolition of it. In other words, he is against every tax proposal we can make. I want to tell him just one thing. We are in this period of increased expenses because of our needs for defence; and defence costs money. It is not a torrent of words such as he has unleashed on us for the fourth time that will pay for our defence preparations. Those preparations need money, and this is the way the government of Canada has decided to raise the money required. These are the proposals which have been prepared to accomplish that purpose. No doubt the hon. member will give us the same speech he has just delivered when we have before us the excise tax bill, the income tax bill and the customs tariff bill. No doubt he will make part of the same speech when we get into the individual items of each of the bills. But inasmuch as he is so violently opposed to all these tax changes, I should like him somewhere, some place, to indicate where we can get this extra $400 million to pay for the increased defence costs we all support.


Mr. Thatcher:: I do not like these commodity taxes in particular, and I am not altogether satisfied that there is not a feasible alternative in the capital gains tax. The minister dealt with that matter last Thursday evening, but I do not think he explained why that tax would not raise the necessary money we could get from these commodity taxes. It seems to me that a capital gains tax is a tax which would affect people who are making money through speculation-for instance, people who bought stocks a few years ago at $3 and $4 and who have sold them for from $50 to $75 to $100. It seems to me to be reasonable that they should have to pay some kind of a tax. It seems to me that about the only way in which any Canadian today can amass great wealth is by capital gains. I do not think any Canadian today can pay his taxes as he goes along and make a fortune, except through capital gains. I therefore respectfully suggest again that the minister or the parliamentary assistant might be well advised to tax this group of people rather than people who are starting out in life and who must buy these appliances.
One of the arguments that he will probably throw back at me in a minute is that if we tax capital gains we have to allow for losses: I do not see that that procedure necessarily would have to follow. If you had a
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modest tax on those capital gains, of say 10 per cent-and I admit that I do not know what revenue that would bring in-or 15 per cent, I do not see why losses have to come into it at all. If that argument does not make sense, I should be glad if the minister would tell me. But he does not have to be quite as sarcastic as he was with the hon. member for Eglinton a moment' or so ago.


Mr. McCann:: The hon. member wants soft treatment.


James Sinclair: The hon. member's request for an expression of the government's attitude was couched in reasonable terms. He did not work himself into a passion. I shall therefore be glad to answer in the same reasonable way. The capital gains tax is of course now in use in the United States. Those administering it find it a very difficult tax to administer; they find it more difficult than the income tax. There is this point to be considered. Once you begin taxing capital gains, you must in turn allow a man to offset capital losses against capital gains. But I think the chief opposition to a capital gains tax in this country is the fact that here, where there is such a great need for development, especially in the pioneer parts of the country, we must give some incentive to the people to put their money into venture capital, in our mines, in our forests, in aluminum plants and things like that. As the hon. member pointed out, there is to be considered the rate of return which you can get back today, with the corporation tax and personal income tax as it is. There is the fact, for example, that the hon. member's leader has already spokem unfavourably on the fact that we are going: to permit public utilities to make five percent. Why should anybody venture capital: if that is the best they can ever expect from risking their capital in some new brave enterprise in northern Ontario, in northern: Quebec, in northern Saskatchewan oc ini British Columbia, when they can do better with no risk by putting that money in government bonds or in some safe established business? I think that in this country the fact that we have not had a capital gains tax has been one of the incentive factors which have been responsible-and I said one of the factors-for this large advent in Canada of United States capital which has been extremely helpful in building up this country/ in the post-war years.


Wilbert Ross Thatcher: But if the tax was 10 percent or 15 per cent, I do not think it would discourage that development about which the-parliamentary assistant speaks.


James Sinclair: That is just an offhand suggestion by the hon. member.

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Wilbert Ross Thatcher: That is correct.


James Sinclair: The Americans felt that if the capital gains tax was to be worth while, it should be of the order of the tax they have, which is 25 per cent. But again, neither the British nor ourselves have ever felt that that was the proper way of making such a tax. If, as you say, some people venture boldly and in the end make considerable money as a reward-and for everyone who makes money, for example in the mines, as I know very well, there are a dozen who lose money- they create work and industry and associated development in this country; and if they make fortunes, we catch up with them eventually through succession duties.


John Lambert Gibson: For the benefit of the hon. member for Moose Jaw, it seems to me that it should be pointed out to him that there has -been a depreciation in the purchasing value of money. You might easily have put in $10 ten years ago and got $20 back now, but you would not be actually any further ahead. That is the way it seems to work out with nearly everybody.
While I am on my feet, and getting back to this sales tax itself, I wonder if the government gave any consideration to keeping the sales tax at the same eight per cent rate and removing some of the exemptions which they now allow? My own experience with the application of these exemptions which are allowed with regard to certain goods that are put into manufacturing plants for use directly in the manufacture of goods is that it has become a regular menagerie, as I am quite sure the Minister of National Revenue very well knows. There is neither rhyme nor reason with regard to the way the exemptions are applied. I do not think even the minister is always convinced as to whether an exemption should or should not apply. I am wondering just how much revenue could have been derived by the government by the application of the eight per cent sales tax o all goods that are produced in Canada, thus getting away from the anomalies and inequities that are now in effect in the application of the act. For instance, with regard to a logging truck that is brought in and which it is conceded is used directly in the manufacture or production of logs, they will concede that the horn on there that goes "peep, peep" is not subject to sales tax. They will concede that is part of the truck. But if you go ahead and put a radio telephone on the truck in order to expedite and facilitate the use of the truck, in order to get more trips per day and in order to produce logs more cheaply, the authorities say no, that the radio telephone you instal is subject to sales

tax. All these things enter into the picture. I know the minister agrees with me in some ways on that matter.


James Sinclair: I must confess that this is the first time I ever heard anybody in the logging industry suggest that the sales tax should go back on logging equipment.


John Lambert Gibson: I did not suggest that.


James Sinclair: As I understood him, the hon. member mentioned specifically just logging equipment.


John Lambert Gibson: I just said on everything, not on logging equipment in particular.


James Sinclair: You mentioned a logging truck.


John Lambert Gibson: Yes. But I was pointing out an anomaly.


James Sinclair: It was because he mentioned logging trucks. I can remember the representations which have been very strongly made by the logging industry in British Columbia, and by other primary industries, that the levelling of sales taxes at that level, on the actual equipment used in the manufacturing process, was inevitably passed on to the consumers, so that there was a real element of double taxation so far as the sales tax is concerned. I think that has been the prime reason behind the removal of the sales tax from machinery and engines used in manufacture and primary production.
To revert to the old system of taxation would in effect be an application of the sales tax twice; on the cost of manufacture and then on the cost of the manufactured product, unless those products were food, fuel or building materials.


John Lambert Gibson: Has the parliamentary assistant any idea how much that would represent in revenue? I was wondering how much was exempt; it would be an interesting figure to have.


James Sinclair: Certainly it is not a figure that I have here. If the Department of National Revenue can make an estimate before the bill comes to the house for second reading I will see that it is available.


Douglas Scott Harkness: About an hour ago I brought up the matter of taxes on school busses and another matter. About three-quarters of an hour ago the parliamentary assistant gave an answer, and now I am back on the same subject. Probably in fifteen or twenty minutes, or something like that-it will be less than twenty minutes judging by the clock- I will get another answer to it. First of all, on a point of order I would like to bring up

the manner in which these questions are being dealt with. I think it would make for a much more orderly debate, and it would be a much better way to deal with the questions brought up by different members here, if each one was dealt with by the minister or the parliamentary assistant at the time it is brought up, instead of waiting until five or six people have talked on a melange of questions, and then deal with them and then these people get up at varying times extending over an hour and ask more questions. The result is we get a very haphazard and disordered method of dealing with these things, and people forget where they are. The result is the debate is a hit and miss one. I certainly think that we should go back to the system which has been followed up to the present time ever since I have been here, and have the minister or the parliamentary assistant, who is acting for him, answer each question as it is brought up, and as far as possible finishing with it and then get on to another subject. As it is now it is all mixed up in the debate, and it is all over Hansard, and everything else.
To come back to the matter which I brought up so long ago-


Louis-René Beaudoin: The hon. member said that his remarks were tantamount to a point of order. I should like to make clear that what he has suggested is not a matter for the chairman to decide. His suggestion, therefore, is made to the minister or to his representative. It is not a matter for the chairman to decide as to how, where and when a minister or his representative introducing a bill or defending a measure is to reply.


Douglas Scott Harkness: If it is not a point for the chairman to decide, then so far as I am concerned I will insist on getting an answer; if I have to keep on asking questions and keep on standing on my feet or shouting or making a lot of noise, I will do it until I get the answer.


James Sinclair: Two years ago I was rebuked by an opposition member for bobbing up and answering every question that was asked. I was told to wait until a series of questions was asked. I am entirely in the hands of hon. members.


Douglas Scott Harkness: No.


James Sinclair: I will mention the hon. member who asked me.


John Lambert Gibson: Let us go back to clause 1.


Douglas Scott Harkness: I think the parliamentary assistant is calling on his imagination in that regard, Mr. Chairman.
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James Sinclair: The hon. member for
Macleodi was the one who rebuked me for bobbing up and answering every question that was asked.


Douglas Scott Harkness: If we have the matter straightened out, that is all that I am concerned with. I do not care what has happened in the past.


Stanley Howard Knowles: That is one of the joys of being a parliamentary assistant.


Douglas Scott Harkness: To return to the question of busses, the parliamentary assistant gave no reply to the representations which I made. All he said really was what I said myself, namely, that there are two kinds of school busses, those owned by school boards and those owned by individuals who operate them on a contract basis. He went on- to say that there would be difficulty as a result because some of these busses or other vehicles are used in other types of business in addition to transporting children to and from school. The representation that was made by the Alberta school trustees association on this matter was that the tax be removed on busses or other vehicles used' solely or exclusively for the purpose of transporting children to and from school; andi therefore the matter of some vehicle which is used only partly for that purpose does not enter into the question, which was the only thing the parliamentary assistant had to say about it.
Furthermore, even if the parliamentary assistant thinks that there would be difficulty in removing the tax from vehicles which might be used by a contractor for some other purpose, surely there would be no difficulty in removing this tax on busses which are owned and operated by school boards. I should think that the tax on the busses or vehicles of that kind could at least be removed and' should be removed. I should like some comments on that. I just did not get an answer; that is what it amounted to.


James Sinclair: Mr. Chairman, as far as I can understand, the hon. member has not even asked a question now. He has given me his opinion on it, and I have said that our policy as to these busses is this. We have removed the excise tax on busses; we are continuing to tax busses.


Douglas Scott Harkness: My question before, Mr. Chairman, and again is: Why has the government not removed' the sales tax on these busses, or what reasons have they for not removing the sales tax on these busses used exclusively for the transportation of children to and from school, and thus by that means

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relieving to some extent the burden on municipal districts so far as education is concerned?


James Sinclair: Mr. Chairman, at times we seem to get so far from the primary purpose of this budget, which is to raise revenue to meet increased defence costs of the country and) to maintain the public services in this country which we provided long before Korea.


Douglas Scott Harkness: If that is the primary purpose of the budget, in the remarks which the parliamentary assistant made just a few moments ago in connection with logging machinery and so forth, he admitted that one of the purposes of the budget also was to take the tax off material used in industry, so that there would be no double taxes, in order to encourage industry. If there is any industry that should be encouraged it is the industry of education. This is one way in which we can encourage that industry. It is much more important to encourage it than to encourage the logging industry or any other industry. Once more I say that not only does the parliamentary assistant's answer fail to meet the argument, but it is not an answer.
The other matter that I brought up was in connection with gasoline trucks used exclusively in the production of coal. The only thing that the parliamentary assistant had to say about that was that diesel trucks used in this way are not subject to sales tax because they are big trucks, and they could not readily be used for any other purpose. Some of these gasoline-powered trucks used for that purpose are just as big as any of the diesel trucks, and I can really see no reason why the gasoline-powered truck should not be put in exactly the same position as the diesel truck. It is true that the diesel truck costs more money, but that is not a matter which should come into it. If we want to bring that argument into it, if the sales tax was put on the diesel truck the government would get more revenue out of it; but they have seen the reasonableness of taking the sales tax off those vehicles which are used exclusively in the production of coal, the purpose being to encourage the coal industry. There seems to be no reason whatever why the same course could not be followed with the gasoline-powered trucks as is followed with diesel trucks.


Herbert Wilfred Herridge: I want to say a few words in support of what I thought was a very reasonable and intelligent proposal made by the hon. member for Moose Jaw, namely, that there is a place in our taxation system for a capital gains tax. The parliamentary

assistant denies that, and says that to some extent it would discourage the people who want to invest venture capital. I can see some argument in that point of view, but many capital gains are made at the present time which are not the result of venture capital. For instance, what about sweepstakes, where a person may win a very large sum of money as a result of a sweepstake and pay no tax to this government on the winnings. The same applies to race track gambling.
Then there is another form of gambling. I have in mind particularly an instance in my own constituency of an American concern that has control over some thirty square miles of timber. During that whole period all they have paid is their timber limits tax to the provincial government. They prevented the development of the large area and refused to sell timber. At the same time local people who owned land had to pay taxes to build roads and schools and provide other facilities. This large American concern purchased the property for a song about forty-five years ago, and has arrested the development of a Canadian industry and a Canadian resource in that whole area. The result has been an increased price in lumber. Because of the great demand for lumber these people are in a position to sell timber contracts at five hundred times their original value. As a matter of fact they have been a blight on the Canadian economy ever since they became owners of the property.
I cannot see why people under those circumstances should not be required to pay capital gains tax to the government. And then I would mention one other point in connection with people who have purchased war assets. All of us know of people who have purchased war assets for a song from the government and are now able to resell those assets back to the government at an immense increase in price. Now, is that fixed capital doing anything to increase the production or improve the economy of the country? It is a straight gamble out of which they are reaping a great profit. I do suggest in all seriousness that here is a place where the capital gains tax should be applied so as to procure income, rather than to increase taxes on household necessities.


Louis-René Beaudoin: Is the house ready for the question?


James Sinclair: I should like to answer the
hon. member by saying that the capital gains tax, after all, would not be regarded as an excise tax and so is not within this resolution. The hon. member might discuss that matter tomorrow. I will be away, but the

minister will continue these and the other two resolutions.


Herbert Wilfred Herridge: I just offered it as an
alternative.


Douglas Scott Harkness: I should like to add a few
brief words respecting the tax on artificial limbs and braces. There has been a good deal of talk about the iniquity of the general sales tax, and the taxes of 15 per cent and 25 per cent. If any sales tax could be described as iniquitous, and I think most people will agree there is a certain amount of iniquity in all of them, then certainly the sales tax on artificial limbs and braces is five times as iniquitous as any other sales tax. Why the minister continues to retain this sales tax on artificial limbs and braces, an absolute necessity for crippled people, is more than I can understand.


Douglas Charles Abbott: They are exempt.


James Sinclair: Artificial eyes, artificial
limbs and parts thereof, are exempted under schedule III of the Excise Tax Act.


Douglas Scott Harkness: Where is that?


Douglas Charles Abbott: Schedule III; it has been
exempt for years.


Douglas Scott Harkness: If they are exempt, I
should like to know about it. I looked through these, and could not see where they were.


Solon Earl Low: I believe the minister has been approached, or there has been communication with him in connection with adding to the list set out in paragraph 7 the drug known as vitamin E. What is the attitude of the department respecting this request? I understand that in recent months vitamin E has been used extensively in the treatment of certain types of heart ailments, and it has been used with considerable success.


James Joseph McCann: Wheat germ is the cheapest one there is.


Solon Earl Low: Yes, it may be the cheapest.
But this particular one is subject to sales tax, and the tax increases the price to a considerable extent. It puts it outside the reach of many patients.


James Joseph McCann: Not at all. You can get all
the vitamin E you want in wheat kernels.


Solon Earl Low: The doctors of the country-


Douglas Charles Abbott: The minister is a doctor.


Solon Earl Low: -do not agree with that. Unfortunately, physicians prescribe it, and it runs into a good deal of money.


James Joseph McCann: You must be acquainted with Dr. Shute.
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Solon Earl Low: I am acquainted with a lot of other doctors who are prescribing vitamin E in a form which is more expensive than that mentioned by the Minister of National Revenue. I could agree with him; but the fact is we are not making that known to the people of Canada. The result is that they go out and pay exorbitant prices to physicians and druggists across the country. It seems to me that the request to repeal the sales tax on that form of treatment for heart ailment should be given favourable consideration.


Jean-François Pouliot: What is the difference in price between vitamin E and vitamin B?


Solon Earl Low: I do not believe I am expert enough to say. There is, I believe, considerable difference. I have bought vitamin B in various forms, and I know pretty well what the price is. I cannot say anything about vitamin E; but the information I have comes from an association which has furnished us with a petition in which it appeals to the House of Commons to repeal the sales tax on vitamin E which is used so extensively in the treatment of heart ailments.


Jean-François Pouliot: I shall tell the hon. member something about the circulars we receive from associations. One day I was urged by an association to make representations in the house. I sent them a copy of Hansard in which there was a speech of mine to the same effect. Then they apologized: and published my speech-all of which shows that these associations know nothing whatsoever of what goes on in the house. It is precisely because we are not well informed by those people that I expected to get some illumination from the hon. member.


Major James William Coldwell: I am pleased to see these two drugs mentioned in the resolution. I agree that there are others which should be considered. I do not know the names of some of them, but I am familiar with one called B-Plex.


James Joseph McCann: That is just a trade name.


Major James William Coldwell: It is prescribed by doctors, and it is very expensive. If patients take such drugs, the bills run up to $30 or $40 a month. It seems to me the list might be considerably lengthened. I should like it to be understood that I am not complaining; the inclusion of these two is a good start, but I should like to see others added. That is my plea to the minister.


Jean-François Pouliot: The most exorbitant profit is made on gin, because it costs the producer about 15 or 20 cents and is sold at $5 a bottle.

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James Sinclair: I have answered the question as to drugs oni two or three occasions already this evening. Drugs which are expensive and which have been shown to be of real value and are accepted and prescribed by the medical profession are considered each year by the department, with the advice of the Department of National Health and Welfare. The Minister of National Revenue is of course a doctor himself. This year we have added these two to our present list. If the use of the drugs mentioned by hon. members becomes widespread by the medical profession, and is recommended in prescriptions, the matter will be considered before the budget is prepared next year.


Louis-René Beaudoin: Shall the resolution
carry?


Some hon. Members:: Carried.


Some hon. Members:: No.
Progress reported.



BUSINESS OF THE HOUSE

Walter Edward Harris: Mr. Speaker, tomorrow we shall continue this debate, and if it is concluded we will continue with the legislation- indicated- last evening.


[Stage Direction]
At eleven o'clock the house adjourned, without question put, pursuant to standing order.


[Stage Direction]
The board decided to make the following recommendation :
Taxation
(a)	That there be included in the proposed revised United States-Canadian double taxation convention, on a reciprocal basis, the exemption from Canadian income taxation (on income derived from outside Canada) of:
(1)	U.S. service personnel serving in Canada,
(2)	U.S. civilians employed by the U.S. government in Canada,
(3)	The wives and minor children of (1) and (2).
(b)	That, by an exchange of diplomatic notes, the provisions of article XVII of the leased bases agreement conferring the exemptions described in (a) above be cancelled as of the date of the coming into force of the proposed revised double taxation convention in a form justifying such cancellation.
(c)	That the exemption from Canadian income taxation, under article XVII of the leased bases agreement, of the following categories be discontinued by an exchange of notes:
(1)	U.S. contractors, or contractors ordinarily resident in the United States, in respect of their profits arising from work at the leased bases,
(2)	U.S. civilians employed by contractors at the leased bases,
(3)	The wives and minor children of (2).
(d)	That the foregoing be without prejudice to the remaining taxation exemptions conferred by article XVII of the agreement.
Customs and Excise Exemptions
(a)	That the customs and excise exemptions accorded to contractor-owned equipment under the terms of article XIV (1) (a) of the leased bases agreement be suspended by an exchange of notes:
(b)	That it be agreed by exchange of notes that article XIV (1) (d) does not accord customs and/or excise exemptions in personal belongings and household effects of contractors and their U.S. employees (after first arrival) or customs and/or excise exemption on purchases in Canada, outside the leased areas, by U.S. military or civilian personnel, or their families:
(c)	That the U.S. authorities continue to exercise every precaution to prevent abuse of the customs and excise privileges enjoyed under the leased: bases agreement.
Post Offices
That it be agreed by exchange of notes that the U.S. military postal system in operation at the Newfoundland bases conform to the following stipulations:
(a)	That they provide military postal services only for U.S. military agencies, U.S. military personnel, authorized U.S. civilians, and their dependents,
(b)	That they dispatch mail only to the United States, its possessions and territories and its military postal installations,
(c)	That geographical locations be not indicated by date stamp or cancellation stamp.
Jurisdiction
(a)	That the government of the United States, through an exchange of diplomatic notes, agree to waive its rights of jurisdiction under the leased bases agreement over Canadian citizens, other British subjects, and alien civilians other than those subject to U.S. military law by reason of their accompanying or serving with the U.S. forces.
(b)	(1) That the governments of the United States and of Canada, through an exchange of diplomatic notes, agree to suspend the exercise of their rights of jurisdiction under article IV of the leased bases agreement other than those waived by the U.S. government under (a) above, for a period of five years, and thereafter subject to six months' notification of termination, except that in the event of war or other emergency the suspension shall, on notification given by either government, cease to operate;
(2) That the Canadian government, as a condition precedent to the waiver and suspension of the exercise of rights under article IV and to the extension to Newfoundland of an amended Visiting Forces (United States of America) Act, give satisfactory assurances that the U.S. officials in Newfoundland will have a degree of jurisdiction comparable to that which they now in fact exercise. In this connection, the U.S. section would regard the proposed letter from the government of Canada to the government of Newfoundland, with a reply from the Newfoundland government that jurisdictional conditions would remain substantially as now exercised, as the basis for satisfactory assurances to be given by the Canadian government.
(c)	That the Canadian government undertake to seek legislation to protect U.S. interests in security offences as envisaged by article V of the leased bases agreement.
(dj That the Canadian government seek amendment to the Visiting Forces (United States of America) Act to provide for the compulsory attendance of witnesses required by U.S. service courts.
(e)	That either government should be free to raise through appropriate channels the matter of any difficulties arising out of the working of the foregoing jurisdictional arrangements.
[Stage Direction]
Wednesday, May 2, 1951